The IRS provides an exclusion, if you’re a homeowner who qualifies, to exclude all or part of any gain from their income, as a result of the sale of your main home. The ownership and use tests require that during the five-year period ending on the date of the sale, you must have owned and lived in the home for at least two years.
• If there is a gain from the sale of the main home, you may be able to exclude up to $250,000 of the gain from income or $500,000 on a joint return, in most cases. If you can exclude all of the gain, you do not need to report the sale on your tax return.
• A main home that sells for lower than purchased is not deductible.
• There are exceptions for those with a disability, some military, and others.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov