What is US Home Sale Exclusion?
When you sell a house or real estate, you will have a capital gain or loss. If the price of selling is higher than buying, you should report the capital gain to the IRS for the increased value of your house. Fortunately, you can use the home sale exclusion to deduct your capital gain.
Home Sale Exclusion is an IRS tax benefit that allows homeowners to exclude a part of or all the capital gains from your income of home selling. If you meet the ownership and use tests, you can exclude the capital gain up to $250,000. If you and your spouse are both qualified, you can exclude up to $500,000 on a joint return.
To claim the home sale exclusion, you need to meet both of the following ownership and use tests.
- You have owned the house for at least 2 of the past 5 years.
- You have lived in the house as your main home for at least 2 of the past 5 years.
USCPA Sophie Luo (羅霞) reminds you that to live in the house as your main home for 2 years, it doesn’t have to be 2 continuous years. You are still qualified if the time period aggregates at least two years of the past 5 years.
If you have any questions or need further help,
please contact us at the USCPA Sophie Luo (羅霞) +886 980919600
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