If you are selling your home, you may be able to exclude the sale’s capital gain from your tax return. The first thing to consider is the home’s ownership and use. To claim the exclusion, you must have owned the home and used it as your primary residence for at least two years.
If you are selling your main home, you may be able to exclude from your return the sale’s capital gain of up to $250,000 for single filers and up to $500,000 on joint returns. If you own more than one home, you can exclude only the gains on selling your main home. However, the loss may not be deductible if you experience a loss in selling your home. You can also choose not to claim exclusion, in which case you must report the gain on your tax return.
Some taxpayers must also report forgiven or canceled debt as income on their tax return, including foreclosure or other processes in which a lender forgives or cancels mortgage debt on the home.
*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov8
Footnotes and Sources
- IRS.gov, March 8, 2023
