Apr 30 2008
$500,000 tax-free!
We would like to sell our home but are concerned about tax penalties next year. What should be aware of before we sell?
Well, if you sell your primary residence, a single person can take $250,000 profit tax-free, and married couples get $500,000.
Small print: some exclusions apply!
This applies to capital gains on the sale of your principal residence. To qualify, you must have (both) lived in the home for the past two out of five years.
If you're selling a rental property that you have not lived in as your principal residence, yes, you may pay tax on capital gains. One way to avoid this is to roll your profits into another income property purchase through a 1031-tax-deferred exchange.
