In many cases, when you sell your home, you stand to make a lot of money. Even better, you don’t necessarily have to pay tax on the proceeds from the sale of your house. That’s because the IRS allows taxpayers to exclude up to $250,000 ($500,000 for married couples) in profit from the sale of their primary residence from their income tax!
To qualify for an exclusion, all of the following must be true:
- The taxpayer owned the home for at least two years.
- The taxpayer lived in the home as their primary residence for at least two of the last five years (with exceptions for temporary absences).
- The taxpayer has not previously excluded the gain from the sale of another home during the two years before the sale of this house.
If you own more than one home, it’s important to remember that the gain exclusion only applies to your primary residence, even if the other home also meets all of the other gain exclusion requirements.
Have questions about selling your property? Taxation Solutions, Inc. can help you determine if you qualify for the maximum gain exclusion, or, if special circumstances enable you to claim the reduced exclusion. Our goal is to help you navigate the confusing tax code to help you stay in compliance while minimizing what you owe. Call now for more information!