Tax Issues When You Sell Your Primary Residence

When a primary residence is sold, the net gain from the sale may be subject to capital gains tax if the transaction doesn't meet certain criteria for excluding the gain from income taxes.  If you meet the tests, taxpayers whose tax-filing status is single can exclude up to $250,000 of profits and taxpayers whose tax-filing status if married filing jointly can exclude up to $500,000 of profits.

Here are the tests:

  • Did you live in the house for 2 out of the last 5 years?
  • Did you sell the house because of work, health, or unforeseeable event?
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