Sale of a Home

Sale of Home

The tax overhaul retained the existing benefit for home sellers. Jointly filing married couples can exclude $500,000 from taxes on the sale of a primary home. The exemption for single filers is $250,000 in profit. For inflation, these amounts are not indexed.

For example, say Sam and Suzan bought a home for $150,000 many years ago and later made improvements that added $100,000. They’re selling the home for $600,000 this year. The sale’s gain or profit is $350,000. Because of their $500,000 exemption, it would all be exempt from capital gains tax.

The homeowner must have used the house as a primary residence for two of the previous five years in order to be eligible for this benefit. Taxpayers are generally not eligible for the full exemption if they excluded the profit from the sale of another home two years before the sale. There are other limits and exceptions, such as for some military personnel.