Good morning to everyone!
I subscribe to a great FREE newsletter from the IRS. It offers some very good tips for your business and keeps you informed of the latest tax issues. Check it out:
http://www.irs.gov/newsroom/article/0,,id=154820,00.html
Today I received my newsletter and it offered the following article: Hopefully, you will find it valuable.
SALE OF YOUR HOME
If you have a gain from the sale or exchange of your main home, you may be able to exclude all or part of the gain from your income.
Individuals may be able to exclude up to $250,000 of capital gain, and married taxpayers filing joint returns may be able to exclude up to $500,000 of gain each time you sell your main home, but generally no more frequently than once every two years.
To qualify for this exclusion of gain, you must meet ownership and use tests.
- Ownership Test: During the 5-year period ending on the date of the sale, you must have owned the home for at least 2 years.
- Use Test: During the 5-year period ending on the date of the sale, you must have lived in the home as your main home at least 2 years.
If you and your spouse file a joint return for the year of the sale, you can exclude the gain if either of you qualify for the exclusion. But both of you would have to meet the use test to claim the $500,000 maximum amount.
If you do not meet the ownership and use tests, you may be allowed to exclude a reduced maximum amount of the gain realized on the sale of your home if you sold your home because of health reasons, a change in place of employment, or certain unforeseen circumstances. Unforeseen circumstances include, for example, divorce or legal separation, natural or man-made disasters resulting in a casualty to your home, or an involuntary conversion of your home.
If you can exclude all the gain from the sale of your home, you do not report the gain on your federal tax return. If you cannot exclude all the gain from the sale of your home, or you choose not to, use Schedule D, Capital Gains and Losses, of the Form 1040 to report it.
For more details and information see IRS Publication 523, Selling Your Home, available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is http://www.irs.gov/.
Links:
- Publication 523, Selling Your Home (PDF 194K)
- Schedule D, Capital Gains and Losses (PDF 136K)
- Tax Topic 701 - Sale of Your Home
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