What is a Home sale exclusion?
The Home sale exclusion is a federal tax benefit under Section 121 of the Internal Revenue Code that allows qualifying homeowners to exclude up to $250,000 for single filers or $500,000 for married couples filing jointly in capital gains from the sale of their primary residence. To qualify, homeowners must meet both ownership and use tests, owning and using the home as their primary residence for at least 2 of the 5 years preceding the sale. The exclusion can be used repeatedly throughout a taxpayer's lifetime, provided there's a 2-year waiting period between claims. The Sell your home strategy helps homeowners maximize this exclusion benefit while minimizing capital gains taxes. Partial exclusions may be available for sales due to work, health, or unforeseen circumstances that prevent meeting the complete requirements.
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