Home
About Us
Home Equity Loan
Debt Consolidation
Second Mortgage
Mortgage Refinance
Home Improvement

Contact Us
Disclaimers

Selling Your House, Moving, Disasters: What They Mean For Your Taxes

by Michele Dawson
Realty Times

With tax time creeping up just next month, it's time to dust off your receipts and tax forms. If you sold your house, moved due to a job or incurred major damage from a natural or man-made disaster in 2003, you'll want to know how your taxes will be affected.

For starters, if you sold your primary house in 2003, you might not have to pay taxes on all or part of the money you make on it. You must have owned the home at least two years and it must have been your main residence for two years.

"If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases)," the Internal Revenue Service says on its website.

Special rules apply if your house is used for business.

However, you can't deduct any loss you might incur on the sale of your home.

Meanwhile, if you had an unreimbursed property loss in 2003, you might be able to deduct it.

"If your home, car, boat or other expensive property was damaged by a fire, flood, vandalism or other sudden and unexpected disaster, you may be able to deduct a portion of the loss from your taxes," said Jeanne M. Salvatore, vice president of consumer affairs for the Insurance Information Institute.

The losses must be pretty huge in order to qualify. If you were underinsured or your home was damaged or destroyed in a natural disaster -- like a hurricane -- or a man-made one like vandalism or burglary, you might have a sizable unreimbursed property loss.

"Generally, you can deduct the loss to the extent it exceeds 10 percent of your adjusted gross income, less one hundred dollars," said Marc J. Minker, CPA/PFS of Mahoney Cohen & Company and member of the American Institute of Certified Public Accountants' personal financial planning executive committee.

Different rules apply if your house was used for business.

If you moved in 2003, the IRS might let you deduct moving expenses. There are two major criteria you must meet: the move must be close to the time you begin work and your new home must be closer to your place of employment than your former home and workplace.

You can generally consider moving expenses incurred within one year from the date you begin work at the new location, whether you get the new job before or after you move.

In order to pass the distance test, your new job location must be at least 50 miles farther from your former home than your old main job location was from your former home. For example, if your old workplace was 10 miles from your old house, your new place of employment must be at least 60 miles from the former home.

And when it comes to the time test, if you are an employee you must work full-time for at least 39 weeks during the first 12 months after you arrive in the region of your new job location.

If you're self-employed you must work full-time for at least 39 weeks during the first 12 months and for at least 78 weeks during the first 24 months after you arrive. If you're married, you can use yourself or your spouse in determining the number of weeks worked, but you can't combine weeks.

There are exceptions. For example, if you're a member of the Armed Forces on active duty and you move because of a permanent change of station, you don't have to meet the time and distance tests.

If you've passed the tests, you can deduct:

  • The cost of packing, crating, and transporting your household goods.
  • Storage and insurance costs related to goods and personal effects within any 30-day period after your things are moved from your old home and before they are delivered to your new place.
  • The cost of connecting and disconnecting utilities.
  • The amount you pay to ship your vehicle and your pets to the new house.
  • Lodging expenses your family incurs during the move period. Meals are not deductible.
  • Traveling to your new home. If you travel by car, you can deduct the standard mileage rate of 12 cents a mile or deduct the actual expenses of gas and oil, parking fees and tolls. You can't deduct general repairs, maintenance, insurance or depreciation of your car's value.

The IRS also tells you what can't be deducted -- everything from the purchase price of your new home to your driver's license to refitting of carpets and draperies.

One thing to keep in mind is that you can't double-dip by taking a moving expense deduction and a business expense deduction for the same expenses. You'll want to take a look at the IRS' publication 463, Travel, Entertainment, Gift, and Car Expenses to determine which deduction is more advantageous.

You also can't deduct any moving expenses that were reimbursed by your employer.

Moving expenses are figured on Form 3903 and deducted as an adjustment to income on Form 1040.

 

 

More Financial News

Great Articles
Refinancing Home Equity Making Big Improvements Reasons to Refinance Budgeting to Buy Understanding Cash-Out
What's Hot Tips For Adjusting Remodel or Refinance? Strengthen Your Credit Tax Implications
9 Ways to Pay Off Debt Refinancing Your Loan 10 Biggest Mistakes Credit Reports Explained Stay on Top of Payments