Taxes On Home Sale Profit

If you have a gain from the sale of your main home you may be able to exclude up to 250 000 of the gain from your income 500 000 on a joint return in most cases.

Taxes on home sale profit. How does the home sale exclusion work. You would have a gain of 200 000 if you purchased your home for 150 000 and you ve sold it for 350 000. Homes get excluded from capital gains tax as long as you and your home fit the criteria.

Depending on your tax bracket you could pay taxes of up to 20 federal income taxes plus state taxes. Refer to publication 523 for the rules on reporting your sale on your income tax return. It depends on how long you owned and lived in the home before the sale and how much profit you made.

The irs states that a home sale exclusion of 250 000 applies to single taxpayers and an exclusion of 500 000 applies to married couples filing joint returns. This is because before 1997 the only way you could avoid paying taxes on the profits from a home sale was to use it to purchase an even more expensive house within two years. To qualify for the 250 000 500 000 home sale exclusion you must own and occupy the home as your principal residence for at least two years before you sell it.

They could take a once in a lifetime tax exemption of up to 125 000 in profits. Here s the most important thing you need to know. Lived in the home as your main home for at least two years the use test gain.

Use schedule d form 1040 or 1040 sr capital gains and losses pdf pdf and form 8949 sales and other dispositions of capital assets pdf pdf when required to report the home sale. 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. Suspension of the five year test period.

If you can exclude all of the gain you do not need to report the sale on your tax return. This would be a tax of 20 000 plus state income tax read. Do i have to pay taxes on the profit i made selling my home.