Sale Of A Home Is Not Always Taxable
If you sell your primary home/residence for a gain, it is not always taxable. If you use the home as your main home for at least two out of the five years before the date of sale, the gain can be excluded up to $250,000 for individuals and $500,000 for married taxpayers.
If the gain is more than the exclusions, then the remaining gain is considered capital gain income and also subject to the net investment income tax.
There are also exceptions to the taxable gain under certain circumstances. For example, if you are relocated because of employment, persons with disabilities, and if you are a member of the military, part of the gain can be excluded.
If you own more than one home, you may only exclude the gain on the sale of your primary home/residence. This is the home that you live in primarily all the time.
If you sell you primary residence at a loss, unfortunately, you cannot deduct it.
NOTE: If you received the first time home buyer credit, this has to be taken into account to figure your gain/loss.
