Married couples can exclude up to $500,000 of gain when they sell their home ($250,000 for individuals). The home must have been the principal residence for at least 2 of the last 5 years. Homeowners can receive a portion of the exclusion based on how long they lived in the home, as long as the sale is due to a change in place of employment or health, or unforeseen circumstances, such as death, divorce, unemployment, or natural disaster.
Consider the following example. A married couple lives in a home for only a year and then sells it, due to unforeseen circumstances, for a $60,000 profit. They are allowed to take up to 50% (because they lived in the home for 50% of the 2 years required) of $500,000. Thus, they can exclude every penny of their $60,000 gain.
Sales of partial interests and of vacant land around your home may also qualify for the exclusion.
The exclusion can be used once every 2 years and at any age. Contact us to see if you qualify.