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When you sell
When you decide to move up to a bigger home, you'll be able to avoid some taxes on the profit you make. Tax law now allows you to exclude up to $250,000 of gain you make on the sale or exchange of property. Married taxpayers filing a joint return can exclude up to $500,000.
You can only take this exclusion every two years. And the IRS requires that you have owned and lived in the house as your principal residence for at least two of the five years before you sold it.
If you must sell before you meet the IRS ownership and residency requirements, you can still get a partial exclusion on any profit. To qualify for prorated tax relief, your home's sale must be because of a change in the your health, employment or unforeseen circumstances.
See your account for more information.
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