Information from IRS.gov
Did you know that in most instances the gains from the sale of your home are taxable. Keep the following in mind is you plan to sell your home this year.
- Exclusion of Gain. You may be able to exclude part or all of the gain from the sale of your home. You must meet the eligibility test, which includes your ownership and use of the home. You must have owned and used it as your main home for at least two out of the five years before the date of sale.
- Exceptions May Apply. One exception applies to persons with a disability and another applies to certain members of the military.
- Exclusion Limit. The most gain you can exclude from tax is $250,000. This limit is $500,000 for joint returns. The net investment income tax does not apply to the excluded gain.
- May Not Need to Report Sale. If the gain is not taxable, you may not need to report the sale to the IRS on your tax return.
- When You Must Report the Sale. You must report the sale on your tax return if you can’t exclude all or part of the gain and if you choose not to claim the exclusion.
- Exclusion Frequency Limit. Generally, you may exclude the gain from the sale of your main home only once every two years (exceptions may apply).
- Only a Main Home Qualifies. If you own more than one home, you may only exclude the gain on the sale of your main home, which is the home that you live in most of the time.
- First-time Homebuyer Credit. If you claimed the first-time homebuyer credit when you bought the home, special rules apply to the sale.
- Home Sold at a Loss. If you sell your main home at a loss, you can’t deduct the loss on your tax return.
- Report Your Address Change. After you sell your home and move, update your address with the IRS.
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