Subject: i have a question
Date: Mon, 28 Jun 2004
I am selling my home after living in it for one year. The state is going to withhold income taxes from the sales proceeds. My realtor told me that the withholding will come back to me when I file my income tax return. Is that true?
Also, can I deduct the selling expenses from the sale of my home? The commission will be $40,000.
Date: Fri, 2 Jul 2004
You should claim the withholding as a tax payment on your state income tax return. (For 2003, California withholding is reported at line 40 on page 2 of Form 540.) Remember to include the withholding in your state tax deduction on Schedule A of your Federal income tax return. Whether you get the withholding back depends on how much taxable gain you report for the sale.
The selling expenses are included as part of your investment to determine whether you have a gain or loss from the sale. A taxable loss from the sale of a personal residence is not deductible from other taxable income.
IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised
that any written tax advice contained on this website was
not written or intended to be used (and cannot be used) by any
taxpayer for the purpose of avoiding penalties that may be
imposed under the U.S. Internal Revenue Code.