Blog: Home Sale Exclusion (Tax Exemption)

As a homeseller, if you have gain from the sale of your home you may be able to exclude $250,000 of that gain from income ($500,000 for married taxpayers).

How do you calculate the “gain”? Let's use an example: If you bought your home for $400,000 and are now selling it for $430,000, your gain is $30,000.

Gross Proceeds ($430,000) minus your Basis ($400,000) = $30,000.

In general, in order to qualify for the home sale exclusion you must meet the "ownership test" and the "use test". You must own the home for a period aggregating two years within the last 5 years prior to the sale. You can meet the ownership test and the use test during two different 2 year periods in the last 5 years but you must meet both.

Check out the IRS website for more details.
https://www.irs.gov/taxtopics/tc701

The information you obtain on this website is not, nor is it intended to be, legal advice. You should consult with an attorney for individual advice regarding your own situation.

The Home Sale Exclusion in a Nutshell

The information you obtain on this website is not, nor is it intended to be, legal advice. You should consult with an attorney for individual advice regarding your own situation.

By Felix G. Montanez, Esq.

The information you obtain on this website is not, nor is it intended to be, legal advice. You should consult with an attorney for individual advice regarding your own situation.