Many clients ask me whether they should expect capital gains when they sell their home. My first advice is always to contact their tax advisor. However, I also do remind them of the principal residence exemption that the IRS allows
As the owner of a home, you can exclude from federal income tax the first $250,000 of profit (up to $500,000 if you are married) on the sale of your home.
To enjoy that tax benefit, you must meet a number of requirements. The most important is that you must have lived in the home as a primary residence for two of the last five years. When you sell your home, there is a form that you must complete for the IRS to report whether the primary residence exemption will apply or not.
And again, it’s always important to consult a tax advisor when preparing to sell any real estate so there are no unwanted tax surprises.
