09 Mar Understanding gain on the sale of a home in relation to taxes
Do I have to report gain on the sale of a home if I use those funds to purchase another residence?
Gain on the sale of a principal residence is not reported or not taxed if you meet certain exclusion criteria. For the gain to be excluded it has to have been your principal residence for at least two out of the last five years. The gain cannot be more than $250,000 for a single filer or $500,000 for married filing jointly filers to be exempt. The exclusion applies even if you are not using the sale proceeds to buy another residence. If the principal residence has been used for business or rental purposes, there are circumstances where some of the gain is taxable even if it is under the exclusion limit. If you sold or are selling your principal residence, contact your local tax advisor for the best treatment.