If the capital gain on the sale of my house qualifies for the federal tax exclusion do I have to report it to the state of Arkansas?

[DS30 · Accepted solution]

No. Arkansas follows the federal guidelines when it comes to claiming the home gain exclusion. If you do not need to report in on your federal income tax return, then you will not report the sale on your AR state income tax return.

You do not need to enter the sale of your primary residence if:

• You never used your primary residence as a rental or took home office deduction
• You have a loss on the sale of your home (Personal capital losses are not reported on your tax return)
• You did not receive a Form 1099-S and
• You meet the home gain exclusion (see below)

You can take the gain exclusion as long as you considered the home your "primary residence" for 2 of the last 5 years. If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse. See  Sale of Your Home for more information on the exclusion.