Tax Savings on Personal Residences
The following is taken from IRS Publication 17, year 2002, pages 108 through 113:
"If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases). Any gain not excluded is taxable."
"You cannot deduct a loss from the sale of your main home."
"Usually, the home you live in most of the time is your main home and can be a:
- House
- Houseboat
- Mobile home
- Cooperative apartment, or
- Condominium
To exclude the gain under the rules of this chapter, you generally must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale."
"More than one home. If you have more than one home, you can exclude gain only from the sale of your main home. You must include in income the gain from the sale of any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time."
"You cannot exclude gain on the sale of your home if, during the 2-year period ending on the date of the sale, you sold another home at a gain and excluded all or part of that gain. If you cannot exclude the gain, you must include it in your income." "However, you can still claim an exclusion if you sold the home due to:
- A change in place of employment
- Health, or
- Unforeseen circumstances, to the extent provided in regulations (as discussed earlier)."
See IRS Publication 17 for additional information.
This information is only meant to give an over view of potential tax savings. Should one determine that they might want to utilize this type of exclusion one should thoroughly study the matter before any action is taken. Before making any decision on the sale of a residence where tax savings on the gain are anticipated, you are advised to seek advise from your tax advisor. I am not a tax advisor. I am a real estate agent, a Realtor®, and I want to represent you in the purchase or sale of property.
Please contact me. Let me represent you. I can help you with your property sale, purchase, and 1031 exchange.