Capital
Gains Exclusion
Personal Residence Capital Gain
Exclusion
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Personal Residence Capital Gains
Exclusion
Taxpayer Relief Act of 1997
When you sell your home, the IRS allows
you to exclude any gain on the sale of
your primary residence from your taxable
income. you can make up to $250,000 in
non taxable profit if you're a single
owner, and $500,000 if you're Married
Filing Jointly and you both meet the use
requirement.
You can claim the exclusion if you owned
and used the home as your main residence for
at least 2 years during the 5-year
period ending on the date of the sale. This exclusion
can only be claimed once in
any 2-year period.
Prior to May 7, 1997 when
this benefit came into play, the only
way you could avoid paying taxes on your
homes profit was to use the money to buy
a more-expensive home within two years.
Sellers age 55 or older could take a
once-in-a-lifetime tax exemption of up
to $125,000 in profits.
When the Taxpayer Relief Act of 1997
became law, the rollover or
once-in-a-lifetime options were replaced
with the current per-sale exclusion
amounts.
Now you don't have to buy another home
with your sale proceeds, and there's no
limit on the number of times you can use
the home-sale exemption. In most
situations, you can make tax-free
profits of $250,000 or $500,000
depending on your filing status every 2
years. Provided you used the house as
your main residence for the 2 year
period.
Requirements:
-
First, the property
you're selling must be your
principal residence for 2 of the
last 5 years. That means you lived
in it.
-
This tax break
doesn't apply to a house or other
property that you have only for
investment purposes, like rental
income property.
You can, however, turn a
rental house into your primary residence
and use it for that purpose for 2 years,
making the sale of it eligible for the
exclusion.
You must meet the IRS use
and ownership test:
Explore our
site and use it to your advantage, we
are
glad to help, Enjoy!
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