| Property
sale gains and losses, Tax implications and the IRS |
When selling a home a couple
can profit up to $500,000 on the sale of the home tax
free over a five year period. This is a rolling benefit
over a five year period, which means that if you profit
$250,000 on the sale of a home you have lived in for
3 years and another $250,000 on a home you've lived
in for the next two years, you have maxed out your benefit
for that five year period. The property does need to
be the principal residence. In order to get the maximum
benefit, you need to live in each home for a minimum
of two years. However, the amount can be pro-rated if
you need to sell your home in less than two years following
the purchase. There may be many reasons for this such
as a new job requires you to move or relocate.
The amount for a single person is $250,000. Again,
if you need to sell and move before the two year period
from the sale, the benefit may be prorated e.g. if you
need to move after six months, you as and a single person
can profit $62,500 where a couple can profit $125,000
tax free.
You only need to report on a gain to the IRS once you
have reached the cap over the five-year period. It can
be reported on IRS Form 1040 Schedule D. For more information
on selling a home and the tax implications see IRS publication
523. Use this link: httt://www.irs.gov to access IRS information
and forms.
|
|
|
|
