@thepinkmonkey wrote:
Thanks to both of you, Opus 17 and Bsch 4477!
So, if I understand both of you, I (a single guy) can realize a maximum gain of $250,000 ( my actual gain will be much less than this) and not have to pay any LTCG?
Happy holidays,
TPM
Yes, probably. See publication 523.
https://www.irs.gov/pub/irs-pdf/p523.pdf
As long as you have owned the home for at least two years, and lived in it as your main home for at least 2 of the past 5 years prior to the date of sale (that means 731 days, the days do not have to be consecutive), then you can exclude the first $250,000 of gain from your income (it is simply not counted as income). There are some exceptions and extensions to the 2 year/5 year rule for military service, divorce, death of a spouse, of if you have to move out after owning for less than 2 years due to certain financial hardships.
However, if you ever used the home for business (including the home office deduction) or as a rental, you must repay (recapture) any depreciation you claimed or could have claimed. If you ever took a casualty loss deduction (such as for storm damage), you must repay that deduction too. And, there is a very important exception in the law called "non-qualified use" if you ever rented the home as a landlord and then moved back into the home as your personal home.
If the home was not your main home, then you owe normal capital gains like selling any other asset. The exclusion only applies to your main home.
