g Text Version
Beauty & Self
Books & Music
Food & Wine
Health & Fitness
Hobbies & Crafts
Home & Garden
News & Politics
Religion & Spirituality
Travel & Culture
TV & Movies

Bored? Games!
Take a Quiz
Rate My Photo

Natural Living
Folklore and Mythology
Distance Learning

All times in EST

Low Carb: 8:00 PM

Full Schedule
g Taxes Site

BellaOnline's Taxes Editor


Will I Owe Taxes If I Sell My Personal Residence

Guest Author - Kate Woods

In slumping real estate markets it may seem that there are no homes selling at gains but in reality some people are still making money on the sale of their personal residences. This prompts the question of whether that gain is taxable for income tax purposes. Let’s take a look at that query...

For sales of a personal residence after May 6, 1997, if you meet the ownership and use tests, you generally have to report a gain only if your gain is greater than certain amounts designated by tax law. What are the ownership and use tests that apply and what are the amounts that apply to making these determinations?

To meet the ownership tests, according to the IRS, you may be able to exclude gain from income if during the 5 years prior to the date of sale and ending on the date of sale the following applied:

•You owned the home for at least 2 years (the ownership test)
•You lived in the home as your main home for at least 2 years (the use test) and
•During the 2 years ending on the date of the sale, you did not exclude gain from the sale of any other home.

Now what are the maximum exclusion amounts? You may exclude up to $250,000 of the gain on the sale of your main home if you meet the 3 tests above. If you own a home jointly and are filing separate returns you can each exclude up to $250,000 of the gain on the sale of your interest in your main home if each of you meet all 3 of the test above. If you are married and file a joint return you may be able to exclude up to $500,000 of the gain on the sale of your main home but there are additional requirements that you must meet.

•You are married and file a joint return for the year
•Either you or your spouse meets the ownership test.
•Both you and your spouse meet the use test.
•During the 2 years ending on the date of the sale, neither you nor your spouse excluded gain from the sale of any other home.

Other situations that may have special treatment available are as follows:
•If you lived in the home for less than 2 years a reduced exclusion may be available in some cases.
•If you were on qualified extended duty in the U.S. Armed Services of the intelligence community there are special provisions that may apply.

It is important to note that the gross sale price is not the number that is being considered when looking at income taxation of gain on the sale of a personal residence but the gain after the gross sale price is reduced by the basis of the property. If after applying the required tests to a personal residence sale you still have a taxable gain to deal with on your personal income tax return it would be reported on Form 1040 Schedule D, for Capital Gains and Losses.

This information related to exclusion of gain only applies when you are dealing with the sale of a personal residence. Publication 523, Selling Your Home is available at www.irs.gov.

I hope you're enjoying Tax Facts on the Taxing Subject of Taxes!

Any U.S. tax advice contained in this electronic communication was not intended or written to be used, nor can be used, by any recipient of this communication for the purpose of avoiding penalties that might be imposed pursuant to the Internal Revenue Code or U.S. Treasury Regulations, or any other state or local law or regulation.

Content of this site is not intended to replace professional consultation.

This site needs an editor - click to learn more!

Add Will+I+Owe+Taxes+If+I+Sell+My+Personal+Residence to Twitter Add Will+I+Owe+Taxes+If+I+Sell+My+Personal+Residence to Facebook Add Will+I+Owe+Taxes+If+I+Sell+My+Personal+Residence to MySpace Add Will+I+Owe+Taxes+If+I+Sell+My+Personal+Residence to Del.icio.us Digg Will+I+Owe+Taxes+If+I+Sell+My+Personal+Residence Add Will+I+Owe+Taxes+If+I+Sell+My+Personal+Residence to Yahoo My Web Add Will+I+Owe+Taxes+If+I+Sell+My+Personal+Residence to Google Bookmarks Add Will+I+Owe+Taxes+If+I+Sell+My+Personal+Residence to Stumbleupon Add Will+I+Owe+Taxes+If+I+Sell+My+Personal+Residence to Reddit

RSS | Related Articles | Editor's Picks Articles | Top Ten Articles | Previous Features | Site Map

For FREE email updates, subscribe to the Taxes Newsletter

Past Issues

Printer Friendly
tell friend
Tell a Friend
Email Editor

Content copyright © 2015 by Kate Woods. All rights reserved.
This content was written by Kate Woods. If you wish to use this content in any manner, you need written permission. Contact BellaOnline Administration for details.


g features
The Taxing Subject of Taxes

Requesting an Extension of Time To Pay Your Taxes

Why We Pay Income Taxes

Archives | Site Map


Past Issues

Less than Monthly

BellaOnline on Facebook

| About BellaOnline | Privacy Policy | Advertising | Become an Editor |
Website copyright © 2016 Minerva WebWorks LLC. All rights reserved.

BellaOnline Editor