Home exclusion for capital gains

Forum|Forum|1 year ago
June 25, 2024
2 replies
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I purchased a home in Sep 2020 and live in it full time. Coming this Sept it will be 4 years. Since I have lived in it 3+ years can I use the exclusion ?

Best answer by VolvoGirl

Yes. You only have to own and live in it for 2 years out of the last 5 when you sell.

It's based on the date of sale.

For a primary home, if you owned and lived in your house for 2 out of the last 5 years when you sell you can exclude the gain up to $250,000 for single or 500,000 for married from tax. You can not take a loss on your tax return. If you made more than a 250,000 (500,000 for joint) gain then the amount over it is taxed. Doesn't matter what you did with the proceeds like buy another house or pay off the mortgage

IRS pub 523 house sale. Figuring Gain or Loss on page 8.

http://www.irs.gov/pub/irs-pdf/p523.pdf

VolvoGirlAnswer

Employee

Yes. You only have to own and live in it for 2 years out of the last 5 when you sell.

It's based on the date of sale.

IRS pub 523 house sale. Figuring Gain or Loss on page 8.

http://www.irs.gov/pub/irs-pdf/p523.pdf

DoninGA

Employee

If you sold your primary personal residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).

Gain or Loss = Sales Price minus Sales Expenses minus Adjusted Basis (Purchase Price plus the cost of improvements prior to the sale)

If you had a gain greater then the exclusion amounts then you would have to report the sale. Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported.