Capital Gains Exemption In Home Sale

Added March 20, 2009 by Ilyce R. Glink

Print Articles

Summary: If you’ve lived in a home for two of the past five years as a primary residence, you may sell and keep up to $250,000 in profits tax free, or up to $500,000 if you’re married. If the property was rented for part of that time and any tax deductions taken, those will need to be recaptured. A tax advisor can ensure there are no other issues you need to consider when selling the home.

Q: I purchased a home in July 2002, lived in it until August 2004, then rented it for 16 months. I am confused about the tax situation. Do I have to wait 5 full years before I sell and take advantage of the capital gains exemption?

A: As long as you have occupied the house as your primary residence for at least 2 of the past five years, you may sell and keep up to $250,000 in profits tax free, or up to $500,000 if you're married.

However, if you took any deductions for the property while it was rented, you'll need to recapture those. Please talk to your tax advisor to make sure there are no other issues you need to consider.

See more articles on this topic by clicking on the "RELATED ARTICLES" above and to the right.

We have over 5000 articles on Real Estate Advice, Personal Finance Advice and Consumer Advice on our site. We encourage you to look at these articles. As always, if you have a comment on our articles, don't forget to post your comment below. We thank you for coming to ThinkGlink.com.

© Ilyce R. Glink. All rights reserved. This content may not be used, distributed, syndicated, compiled or excerpted in any medium or form without written authorization from Think Glink, Inc. For information on syndicating ThinkGlink.com please contact us.

Previous article Next article