Sold a home in 2020? Here’s what you need for your taxes…

Sold a home in 2020? Here’s what you need for your taxes…

It's time to start collecting the documents showing what you paid, how much you got paid and, in some cases, how your taxable gain from a sale can be reduced.

It’s that time a year again. The time most people dread — tax season.

Like death, it cannot be avoided. Well, I guess it can be avoided if you choose not to file or are not required to file, but that’s another story.

As you pull together all of the information you’ll need to complete your individual, corporate or LLC return, here are some resources you may find helpful regarding your real estate.

If you bought or sold a home or income property last year, you’ll probably have your closing statement in your records. Most people these days have it in digital format. You may have received it from your agent, your escrow officer, 1031 Tax Deferred Exchange accommodator, office manager or transaction coordinator.

Check back through your emails. If you cannot locate your closing statement, ask your agent or escrow officer. You may need proof of your original purchase price to calculate your capital gains tax liability. Your agent most likely can help you find this through MLS records, through connections with a title insurance company or through your county recorders’ office.

The recording of a property sale is a matter of public record and can be found through a variety of channels. 

You will certainly need documents showing that your 1031 Tax Deferred Exchange was completed on time, allowing you to defer paying capital gains taxes. Your 1031 accommodator will be the best source for those if you don’t have them on hand.

If you need proof of the amount you paid in property taxes, most California counties provide that information online. The records can be searched at in Riverside County. You can search by your address or assessor’s parcel number.

If you sold a home that was owned by you and a deceased spouse or other relative, you get a “stepped-up basis,” allowing you to base your capital gain on the home’s value at the time of death rather than when it originally was purchased.

If you didn’t calculate the stepped-up home value at the time of your relative’s death, don’t worry. Your agent can help you pull up comparable sales for homes similar to yours that sold around the time of your family member’s death.

Consult your tax professional to see what documentation will suffice for this purpose. Some will say that a Broker Price Opinion or BPO, which your agent can calculate based on comps and a review of the condition of your home, will suffice. Others may recommend an appraiser render that opinion.

Your tax accountant also can help you identify which items may be deductible or should be reported to either California’s Franchise Tax Board or the IRS.

There’s no time to lose. April 15 is fast approaching.

Article Inspo @OCRegister

Post a Comment