Real Estate Tax Tips
Many people do not know that you may qualify to have all or part of any gain from the sale of your main home to be excluded from your income. It is important your main home is the home you live in most of the time.
To qualify and claim the exclusion you must meet certain requirements. These are:
- that you must have owned the home for at least 2 years, and
- that you lived in the home as your main home for at least 2 years.
Both conditions must happen during the 5-year period ending on the date of the sale.
Once you know you qualify, you can exclude up to $250,000 of the gain from your main home from your income if your filing status is single, married filing joint or head of household. You may exclude $500,000 gain from your income if your filing status is married filing joint and widow.
This means that you do not have to report the sale of your main home on your tax return unless you have a gain in the sale and cannot exclude all of it or choose not to exclude all of it. If you have a loss on your principal residence (main home), you cannot use this as a deduction on your tax return.
You may only exclude up to a maximum of $250,000 or $500,000 depending on your filing status on your main house. If you have a secondary house, these exemptions do not apply in whole or part. You must report the sale and any capital gain or capital loss on the secondary house regardless.
If you would like to learn more or to set up a consultation call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.
The above information is of a general nature only and should not be relied upon for specific situations.