Information from IRS.gov
If you own your home, you may qualify to exclude from their income all or part of any gain from the sale of their main home.
- To claim the exclusion, the homeowner must meet the ownership and use tests. This means that during the five-year period ending on the date of the sale, the homeowner must have:
- Owned the home for at least two years
- Lived in the home as their main home for at least two years Gain. If there is a gain from the sale of their main home, the homeowner may be able to exclude up to $250,000 of the gain from income or $500,000 on a joint return in most cases. Homeowners who can exclude all of the gain do not need to report the sale on their tax return
- A main home that sells for lower than purchased is not deductible.
- Reporting the sale of a home on a tax return is required if all or part of the gain is not excludable. A sale must also be reported on a tax return if the taxpayer chooses not to claim the exclusion or receives a Form 1099-S, Proceeds from Real Estate Transactions.
- There are exceptions to the rules above for persons with a disability, certain members of the military, intelligence community and Peace Corps workers, among others. More information is available in Publication 523, Selling Your Home.
- Keep in mind:
- Adjusted basis of the home sold
- Gain (or loss) on the sale
- Gain that can be excluded
Remember…
- Taxpayers who own more than one home can only exclude the gain on the sale of their main home. Taxes must paid on the gain from selling any other home.
- Taxpayers who used the first-time homebuyer credit to purchase their home have special rules that apply to the sale.
- Work-related moving expenses might be deductible.
