Estate Planning and Tax Lawyer Blog

For those individuals who are selling or have sold their home, the IRS has some important information to keep in mind. If you have own and used your house as your main residence for two out of the five years before the sale date, you are usually eligible to exclude up to $250,000 of the gain from your income ($500,000 for a joint return in some cases). If you have excluded the gain of another home during the two-year period before the sale of this home, then you do not qualify for the exclusion and the gain is taxable. If you are eligible to exclude the entire gain from the sale of your home, you do not need to include the gain on your tax return. If you are required to report the gain, you must include it on Form 1040, Schedule D, Capital Gains and Losses, but you cannot deduct a loss from the sale of your main home. You can determine the adjusted basis of your house by using worksheets provided in Publication 523. You may only exclude gain from your main home, which is the home you primarily live. You are also required to repay the first-time homebuyer credit if the property you purchased is no longer used as your principal residence within 36 months from purchase. The repayment is due the year the property is no longer your principal residence with your income tax return. Be sure that when you move that you update your address with the Internal Revenue Service and the United State Postal Service.