You must meet all these requirements to qualify for a capital gains tax exemption: You must have owned the home for a period of at least two years during the five years ending on the date of the sale. You must have used it as your main home for at least two years during the past five-year period after the sale or exchange.
What is the IRS capital gains home sale exclusion?
The IRS capital gains home sale exclusion can be a valuable tax-saving tool if you are eligible. As a homeowner, you may have concerns about paying capital gains tax when you decide to sell your home. Luckily, there is a tax provision known as the " Section 121 Exclusion " that can help you save on taxes following a home sale.
Can I use the capital gains tax exemption for a home sale?
You can’t have used the exclusion for any home sold or exchanged during the two-year period. This period ends on the date of the current sale or exchange. If you don’t qualify for the full capital gains tax exemption exclusion, you’ll be able to get a reduced exclusion with an exception.
