Thinking about selling a house or cashing out an investment property in Terre Haute before year‑end? The right tax moves can save you thousands and help you start next year with a clean slate. You want clear rules, local deadlines, and simple steps you can take now. In this guide, you’ll learn how federal rules apply, what’s different in Indiana and Vigo County, and practical ways to time your sale and manage taxes. Let’s dive in.

What’s new that affects Terre Haute

Indiana keeps a flat state income tax. It is 3.05% for 2024 and is set to adjust to 3.00% in 2025. You also pay a county income tax based on where you live or work. Vigo County’s resident rate has been reported around 1.25%. Check the latest official rate before adjusting your withholding. You can review state and county updates through the Indiana Department of Revenue and local listings of county rates.

• Review Indiana state rate guidance at the Department of Revenue: Indiana DOR tax rates and notices.
• See an overview of Vigo County’s reported local income tax rate: Vigo County income tax overview.

Indiana homestead deductions and circuit‑breaker caps can reduce property tax on owner‑occupied homes. Homestead property taxes are capped at 1% of gross assessed value, with different caps for other property types. Learn how deductions and caps work through the state’s Department of Local Government Finance: Indiana homestead deductions and caps.

Property tax bills in Vigo County are commonly due in two installments. For 2025, due dates were published as May 12 and November 10. Always confirm the current year’s dates with the county or DLGF. See the state’s due date overview: Property tax due dates.

Recent federal law also changed a few planning levers. A federal package expanded the SALT deduction cap window for many taxpayers beginning in 2025 and included updates to programs like Opportunity Zones. For a high‑level summary, see the National League of Cities’ overview: Recent federal changes affecting local taxes and incentives. Your specific benefit will depend on income, filing status, and whether Indiana conforms to federal changes for your year of filing.

Selling your primary home

Use the home sale exclusion

If you owned and lived in your Terre Haute home for at least 2 of the last 5 years, you may exclude up to $250,000 of gain from federal tax, or up to $500,000 if married filing jointly. Review the ownership and use tests, how to calculate gain, and reporting steps in the IRS guidance: Sale of your home rules and FAQs.

Watch for past rental or business use

If you ever rented out the home or claimed a home‑office deduction, any depreciation you took or could have taken after May 6, 1997, is not excludable. That part of your gain is taxed as unrecaptured Section 1250 gain, up to 25%. The IRS explains how rental or business use affects your exclusion and reporting in the same guidance above.

Time the sale across tax years

Long‑term capital gains are taxed at 0%, 15%, or 20% based on your taxable income. If you can choose to close late this year or early next year, model both scenarios. The goal is to see which year keeps you in a lower bracket or pairs your gain with offsetting losses. For bracket thresholds and NIIT considerations, see this overview: Capital gains tax rates and brackets.

Selling an investment property

Consider a 1031 exchange

A 1031 like‑kind exchange lets you defer gain when you swap investment real estate for qualifying replacement property. You must identify replacement properties within 45 days and acquire within 180 days, using a qualified intermediary. Get the rules and timing details here: IRS 1031 exchange guidance.

Look at installment sale terms

If you sell and accept payments over time, you may spread taxable gain across the years you receive those payments. This can ease cash flow and help manage your tax bracket. Learn the basics of reporting on Form 6252: Installment sale overview.

Keep clean depreciation and basis records

Your taxable gain depends on your adjusted basis, which includes purchase price plus capital improvements minus depreciation. Keep your depreciation schedule and improvement receipts current so you can calculate gain and any unrecaptured Section 1250 portion accurately when you sell.

Property tax moves before December 31

• If you itemize deductions and you are not limited by SALT caps for the year, prepaying a property tax installment before December 31 can increase your federal deduction. For personal real estate, the deduction applies in the year you actually paid. For rentals, property tax is a business expense and not subject to the personal SALT cap. Read more about how the deduction works: How property tax deductions work.
• Indiana homeowners can stack state deductions with circuit‑breaker caps. If you are preparing to sell, verify your homestead status and confirm your tax installment schedule: Indiana homestead deductions and caps and Property tax due dates.

Estimated taxes and cash planning

A big taxable gain can trigger an estimated tax obligation. If you are light on withholding, consider a catch‑up estimated payment to avoid penalties. Federal estimated payments are due quarterly, and safe‑harbor rules can protect you from underpayment penalties if you meet certain thresholds. See schedules and safe‑harbor details here: IRS Publication 505.

Quick year‑end checklist

• Confirm whether you meet the 2‑of‑5‑year tests for the home sale exclusion. If yes, estimate your potential excludable gain using your records. Start with the IRS overview: Sale of your home rules and FAQs.
• If your gain is large, model closing in December versus January to see which year offers a lower capital gains bracket or better offsets with other income and losses. Reference current brackets: Capital gains tax rates and brackets.
• Investors: line up a qualified intermediary now if a 1031 exchange is possible. The 45‑ and 180‑day clocks are strict: IRS 1031 exchange guidance.
• If you itemize and it fits your plan, consider prepaying a Vigo County property tax installment before December 31: How property tax deductions work.
• Review Indiana and Vigo County income tax rates so your withholding or estimates match your expected gain: Indiana DOR tax rates and notices and Vigo County income tax overview.
• If a sale will produce a big taxable gain, make or adjust federal estimated payments to avoid penalties: IRS Publication 505.

Documents to gather

• Closing disclosures for both purchase and sale.
• Records of capital improvements, including invoices and proof of payment.
• Depreciation schedules for any prior rental or business use.
• Dates you lived in the property and any prior use of the home sale exclusion.
• Contact info for the closing agent and any Form 1099‑S issued at closing.

Local, responsive help when you need it

You do not have to sort this out alone. If you are weighing a sale, planning a 1031 exchange, or deciding whether to list this year or next, let’s talk strategy that fits Terre Haute timelines and your goals. Reach out to Andrew Southard Realty, LLC for local market insight, timing advice, and a plan to prep, price, and market your property the right way.

FAQs

Will I owe federal tax when I sell my Terre Haute home?

• If the home is your primary residence and you meet the 2‑of‑5‑year tests, you can exclude up to $250,000 of gain ($500,000 for married filing jointly); gains above that and non‑qualifying portions may be taxed at long‑term capital gains rates, and prior depreciation for rental or home‑office use is taxed separately. See the IRS rules here: Sale of your home rules and FAQs.

How do capital gains brackets affect timing my closing date?

• Long‑term capital gains are taxed at 0%, 15%, or 20% based on your taxable income; if you can choose December versus January, compare both years’ income to see which keeps you in a lower bracket. Reference current thresholds: Capital gains tax rates and brackets.

Can I defer tax if I sell an investment property in Vigo County?

• Yes. A properly executed 1031 exchange can defer gain if you replace with qualifying real estate within the 45‑ and 180‑day windows, and an installment sale can spread gain across future years. Start here: IRS 1031 exchange guidance and Installment sale overview.

Should I prepay my Vigo County property taxes before December 31?

• It can help only if you itemize, the taxes are assessed and paid within the calendar year, and you are not blocked by SALT limits for that year; rental property taxes are business expenses and not subject to the personal SALT cap. Learn how this deduction works: How property tax deductions work.

What Indiana and local tax rates should I keep in mind?

• Indiana’s individual income tax is scheduled at 3.05% for 2024 and 3.00% for 2025, and Vigo County has a separate local income tax for residents. Check current rates here: Indiana DOR tax rates and notices and Vigo County income tax overview.