Relocation.com - Library, Real Estate Buyer's Guide, Property sale gains and losses, tax implications and the IRS

Moving From Country

Moving to Country

Property sale gains and losses, tax implications and the IRS

When selling a home a couple can profit up to $500,000 on the sale of the home tax free over a five year period. This is a rolling benefit over a five year period, which means that if you profit $250,000 on the sale of a home you have lived in for 3 years and another $250,000 on a home you've lived in for the next two years, you have maxed out your benefit for that five year period. The property does need to be the principal residence. In order to get the maximum benefit, you need to live in each home for a minimum of two years. However, the amount can be pro-rated if you need to sell your home in less than two years following the purchase. There may be many reasons for this such as a new job requires you to move or relocate.

The amount for a single person is $250,000. Again, if you need to sell and move before the two year period from the sale, the benefit may be prorated e.g. if you need to move after six months, you as and a single person can profit $62,500 where a couple can profit $125,000 tax free.

You only need to report on a gain to the IRS once you have reached the cap over the five-year period. It can be reported on IRS Form 1040 Schedule D. For more information on selling a home and the tax implications see IRS publication 523. Use this link: httt://www.irs.gov to access IRS information and forms.

Rate This Article From 1 (Lowest) to 5 (Highest)
12345

Average

Related Articles

Stigmatized property

Our recomendation

Determine your home value

Before you buy a home

When Buying, Think Re-Sale Value