Did you sell your personal residence this year ? Did you repurchase/upgrade to a newer home? If yes, then the below article provides useful information to keep in mind regarding tax benefits. Consult a tax professional for more information.
As per the IRC Section 121 home sale gain exclusion rules, married couples can exclude upto $500,000 from taxable income tax gains(singles can exclude upto $250,000).
The primary rules to take advantage of this exclusion are :
- The residence should be owned as the primary residence(for the seller) for at least two years out of the five year period ending on the date of sale.
- The residence should be used as the primary residence(for the seller) for at at least two years out of the five year period ending on the date of sale.
Exceptions to the rule
Anti-recycling rules
The exclusion is available only when the taxpayer has not excluded an earlier gain within the two-year period ending on the date of sale as per IRS section 121 (b) (3). The capital gain exclusion privilege generally cannot be recycled until two years have passed since it was last used.