If you are in the process of selling your home, it’s very important that you know the tax implications involved:
- If you have owned and used your home as your primary residence for two years out of the five years prior to the date of its sale you do not have to report the gain on the sale as part of your income. If all of the gain is excludable, you do not need to report the sale on your tax return.
- Losses from the sale of your primary residence are not excludable.
- Only the gain from the sale of your primary residence can be excluded on your tax return. You can’t exclude the gain on a second home.
- Up to $250,000 of the gain for single taxpayers and $500,000 for joint filers can be excluded from your income.
- Gains that are not excludable are considered taxable and must be reported on Form 1040, Schedule D, Capital Gains and Losses.
More information can be found on IRS Publication 523, Selling Your Home