home taxes

Any gain on these limits is subject to tax on capital gains (capital gains tax). This benefit can be used for 24 months, but you must meet certain requirements to avoid the tax. The most important requirement to qualify for a tax exclusion is to have lived in the house at least two years of the five years preceding the sale.

The two years can be measured continuously or a total of 730 days. Short absences such as vacation, count as time lived in the residence.

If a couple want to get the $ 500,000 exclusion and deliver a joint return, both must meet the requirement of two-year stay, but only requires one of the two has the name on the documents of ownership.

If owners are not married, everyone is entitled to the exclusion by $ 250,000 and each must appear on the ownership document, in addition to meeting the requirement of two years of residence.

You can get a partial exclusion if you have lived less than two years before selling the house, if the reason for selling is due to job relocation, health problems, divorce or separation, death of an owner or a relative who lives in the house of the same, layoffs, underemployment or damage of terrorism, among other things. A tax advisor can give you more details about the new rules for partial exemption.

The law today is very beneficial to sellers, and has evolved significantly since 1997, when it was approved. Before the 1997 law was necessary to buy a more expensive home to avoid paying taxes on profits. There was an exception for persons aged 55 years who were entitled to make a maximum profit and only $ 125,000.

Unfortunately, there was no change in the law with respect to a capital loss. If you sell your house and lose money, you can not deduct the loss. Fortunately, the housing boom has lifted prices extensively in recent years, reducing the chance that you lose money.