1. If you’ve have owned and lived in your home for two of the five years prior to selling it, you can generally exclude up to $250,000 of the gain from your income ($500,000 on a joint return. In most cases.)
2. You are not eligible for this exclusion of you sold another principle residence within the past two years and excluded the allowable gain from your income.
3. According to the Internal Revenue Service (IRS), you do not have to report the sale of your home on your tax return unless:
- You have a gain and you do not qualify to exclude all of it, or
- You have a gain and choose not to exclude it.
- Otherwise, you must report the gain on Form 1040, Schedule D
4. If you have a gain on your principle residence that exceeds the allowable deduction (the amount in excess of $250,000 / $500,000 for couples) is taxable.
5. You can’t deduct a loss from the sale of your primary residence.
6. Special rules apply when you sell a home from which you’ve received the first-time home buyer credit.
(See IRS publication 523,”Selling Your Home,” for details.)
See » http://www.irs.gov/publications/p523/index.html
As with any tax information, your personal situation (including such things as divorce)can have major tax implications. And since IRS tax rules change often,you’ll want to be sure to consult with a qualified tax specialist.