Keep These Tips in Mind When Selling a Home
If you are selling your home, you may be able to exclude the sale’s capital gain from your tax return. The first thing to consider is the home’s ownership and use. To claim the exclusion, you must have owned the house and used it as your primary residence for at least two years.
If you are selling your main home, you can exclude up to $250,000 of capital gain for single filers and up to $500,000 for joint filers from your return. If you own more than one home, you can exclude only the gains on selling your primary home. However, the loss is generally not deductible if you sell your home at a loss.
You can also choose not to claim exclusion, in which case you must report the gain on your tax return. Some taxpayers must also report forgiven or canceled debt as income on their tax return, including debt forgiven or canceled through foreclosure or other processes in which a lender cancels mortgage debt on the home.
This information is not a substitute for individualized tax advice. Please consult with a qualified tax professional to discuss your specific tax issues.
Source: IRS.gov, March 8, 2023