Do I pay tax when I sell my home?
Short answer: Often not. If you owned and lived in the home for two of the last five years, up to $250,000 of gain ($500,000 for married couples filing jointly) is excluded.
The home sale exclusion lets you exclude up to $250,000 of gain, or $500,000 for a married couple filing jointly, when you owned the home and used it as your main home for at least two of the five years before the sale.
Gain is the sale price minus selling costs and your adjusted basis, which is what you paid plus improvements. Keep improvement records for this reason.
Situations that need a closer look:
- Homes that were rented out or used for business.
- Sales after a divorce or the death of a spouse.
- Selling before two years because of a job change, health or other qualifying reason, which can allow a partial exclusion.
General information from Davis Schuler & Associates, LLC, not advice for your situation. Tax rules and thresholds change; confirm the current rules before acting.
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