Official Internal Revenue Website: www.irs.gov
| List of Informational Topics Below: |
- Topic 701 - 10.1 Capital Gains, Losses - 1031 Exchange |
| Topic 701 Sale of Your Home |
Visit IRS.gov for any additional information not covered below If you have a gain from the sale or exchange of your main home, you may be able to exclude from income all or part of the gain, please refer to Publication 523 for more information on the gain exclusion. The exclusion may be allowed each time you sell or exchange your main home, but generally no more frequently than once every two years. You cannot deduct a loss from the sale of your main home. If you sold your home under a contract that provides for part or all of the selling price to be paid in a later year, you made an "installment sale." Refer to Topic 705 for more information. To be eligible for an exclusion, your home must have been owned by you and used as your main home for a period of at least two years out of the five years prior to its sale or exchange. The required two years of ownership and use during the five–year period ending on the date of sale do not have to be continuous. You can meet the ownership and the use tests during different two year periods. However, both tests must be met during the five–year period ending on the date of the sale or exchange. If you did not meet the ownership and use tests, or if during the two–year period ending on the date of the sale or exchange you sold or exchanged another home at a gain and excluded all or part of that gain, you may be allowed to exclude the gain realized on the sale or exchange of your home if: - You sold or exchanged your home due to a change in place of employment or health or unforeseen circumstances.
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| 10.1 Capital Gains, Losses Sale of Home: Property (Basis, Sale of Home, etc.) |
Visit IRS.gov for any additional information not covered below I lived in a home as my principal residence for the first 2 of the last 5 years. For the last 3 years, the home was a rental property before selling it. Can I still avoid the capital gains tax and, if so, how should I deal with the depreciation I took while it was rented out? If, during the 5-year period ending on the date of sale, you owned the home for at least 2 years and lived in it as your main home for at least 2 years, you can exclude up to the maximum dollar limit. However, you cannot exclude the portion of the gain equal to depreciation allowed or allowable for periods after May 6, 1997. This gain is reported on Form 4797 (PDF). If you can show by adequate records or other evidence that the depreciation allowed was less than the amount allowable, the amount you cannot exclude is the amount allowed. Refer to Publication 523, Selling Your Home, and Form 4797 (PDF), Sale of Business Property, for specifics on calculating and reporting the amount of gain. - Publication 523, Selling Your Home If I take the exclusion of capital gain tax on the sale of my old home this year, can I also take the exclusion again if I sell my new home in the future? With the exception of the 2-year waiting period, there is no limit on the number of times you can exclude the gain on the sale of your principal residence so long as you meet the ownership and use tests. - Publication 523, Selling Your Home |
| 1031 Exchange Like-Kind Exchanges – Real Estate Tax Tips |
Visit IRS.gov for any additional information not covered below - Publication 544, Sales and Other Dispositions of Assets |
Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.