The Internal Revenue has some guidelines in place when you sell your primary residence. You typically can exclude a profit of as much as $500,000 if you're married and file jointly with your spouse, single, the maximum amount is $250,000. The amount is based on your profit, not on the total sale price of your home.
To qualify for the maximum amount, you must have owned the home and lived it in as your primary residence for at least two of the five years prior to the sale. Contact the IRS or your tax advisor prior to selling your home to get a firm basis of your tax or tax relief.
Even if a homeowner can't pass the ownership and two to five years prior, that person still might be eligible for a "reduced maximum exclusion." To qualify, the sale of your main home must be due to one of the following reasons: "a change in place of employment," or "health," or "unforeseen circumstances," the IRS says in Publication 523 ("Selling Your Home").
The IRS defines "circumstances" as "the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home." That would include such things as "natural or man-made disasters or acts of war or terrorism resulting in a casualty to your home, whether or not your loss is deductible." See Publication 523 for more details.
Login to the Internal Revenue Website for additional information and to verify the content of this post or contact your tax advisor.
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