Capital Gains and Home Selling: How it Works
Many first-time homeowners wonder how capital gains work when it comes to selling their home. Mainly, can you exclude these gains come tax time? The answer is yes, but only if you meet certain criteria.
If you sell your primary residence, you may be able to exclude up to $250,000 of gain – $500,000 for married couples – from your federal tax return. However, in order to qualify for this exclusion, the IRS says your home must have been owned by you and used as your main home for a period of at least two out of the five years prior to its sale.
You also must not have excluded gain on another home sold during the two years before the current sale. Special rules apply for members of the armed, uniformed and