CONGRATS ON THE SALE OF YOUR HOME.
Now that that’s over and done with let’s talk about the tax part of saling your home. I know your thinking headache but for the most part you probably don’t even have to report it.
Did you know if you owned and lived in the place for two of the five years before the sale, then up to $250,000 of profit is tax-free.If you happen to be married and you two file a joint return you get double the amount so 500,000 of the profit is tax free. The Irs allows you to exclude it from your taxable income. Only thing is if you sold and actually sold for a loss you can’t deduct that loss.
You can use this exclusion every time you sell a primary residence, as long as you owned and lived in it for two of the five years leading up to the sale, and haven’t claimed the exclusion on another home in the last two years.
If your profit exceeds the $250,000 or $500,000 limit, the excess is reported as a capital gain on form Schedule D.
You can use this exclusion every time you sell a primary residence, as long as you owned and lived in it for two of the five years Before you actually sale the home and you haven’t claimed the exclusion on another home in the last two years.
So in order to get the exclusion There are three tests you must meet in order to treat the gain from the sale of your main home as tax-free:
TIME you lived in the home as well as time it’s been since u last sold home.
OWNERSHIP- you owned it 2 out of 5years
Residence- It was your primary residence
THERE ARE A FEW MORE THINGS TO TAKE INFO CONSIDERATION SUCH AS