Did you know that if you have sold your home in the last year and meet the following qualifications you might be able to exclude the tax on the gain of your sale?
As a law substitute put into affect in 1997, you may exclude tax on the maximum amount of $250,000 for a single person and $500,000 for a married couple.
There are several regulations and qualifications that pertain to the exclusion of tax on the sale of a home. Some of those qualifications are:
- The property must be your principal residence. Some items that help determine if your home would be considered your principal residence are the amount of time the residence was used, the address on your driver's license, your car and voter registration addresses, the location of the taxpayer's banks, and the address on your bills.
- The gain from vacant land that was used as part of the residence may be excluded if the land sale occurred 2 years prior to or after the sale of the residence.
- You may also be eligible to exclude gain from your business if your business was within the same dwelling unit as your residence.
- If you are joint owner and not married and eligible for the exclusion, you would qualify for $250,000 per owner.
- The residence must be used as your residence for 2 of the last 5 years before it was sold to qualify.
- You may qualify for this exclusion every 2 years.
If you qualify for this exclusion of tax on your gain from the sale of your principal residence, you will need to file form 1040X. You may also amend a return if you have already filed your return.
For answers to all your tax-related questions, visit TurboTax Online today.