Selling Your Home and Taxes

 Are you planning on selling your home in the near future? Or, maybe you’ve sold it already and are unsure what you can expect in terms of taxes. It really all depends on a lot of factors, such as whether you’re married or single and on whether or not the home counts as your primary residence.  

If You’re Single . . .  

If you’re single, you’ll be glad to know that you can exclude as much as $250,000 from the capital gains tax when you sell your primary personal residence.  

If You’re Married . . .  

Married people can shield even more from the capital gains tax—up to a cool $500,000. Of course, the residence must qualify as their primary residence in this case too.  

What Qualifies as a “Primary Residence?”  

If you own more than one property, you may be wondering which properties, exactly, can count as your  “primary personal residence.” Well to start with, the property must be somewhere that you actually lived, not a property you used solely as an investment. You also need to be able to demonstrate that you have lived in the home for at least two of the previous five years. Those five years are counted from the date of the home’s sale. Remember, though, that you can’t claim the exclusion more than once every two years.  

Ownership Matters  

Furthermore, know that just living in a property for a minimum of two of the last five years isn’t enough. You also need to have actually owned the property for at least two of those years. Often, people will have rented a property before purchase and are upset to find that, because they didn’t own the property for at least two years, they don’t qualify for this exclusion.  

As you can see, selling your home and then dealing with the related taxation can be quite tricky. It gets even more tricky when things like divorce or special circumstances come into play. If you’re feeling confused about how to report your home sale on your taxes or about if and how you qualify for the capital gains tax exclusion, remember that you can (and should!) always call on a tax professional for help and support.