Tax Relief: Selling Your Home

It is actually possible for the US taxpayer to obtain tax relief on the sale of their home, if you receive a gain on the sale of your main home. There is a way to exclude part or even the entire gain from your income. Individual tax payers may exclude $250,000 in capital gains and, if married and filing a joint return, an exclusion of up to $500,000 is possible. This gain can be excluded each time a main home is sold; but, the frequency of this should be no more than every two years.

In order to qualify for this form of tax relief, an ownership and use test must be met:
• The Ownership Test must prove that during a five year period, ending with the date of sale, the main home should have been owned for a minimum of two years.
• The Use Test must prove that during a five year period, ending with the date of sale, the owner of the home must have occupied the house as the main home for a minimum of at least two years.


When you and your marriage partner file a joint income tax return for the year of the sale, if either of you qualify for this form of tax relief, you may exclude the gain; but, only if you both meet the requirements of the ownership and use test. The maximum amount that may be claimed is $500,000. If you do not meet the requirements of either of these tests, you might still be allowed to exclude a reduced amount on the gain from the sale.

By: N.F.Centeno

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