Can I sell my home tax free?
The tax exemption on the sale of a principal residence is very important to understand, $250,000 tax-free (up to $500,000 for a qualified married couple).
To qualify for the exemption, you must have owned and occupied your primary home for at least 24 of the 60 months before its sale. Only one spouse’s name need be on the title, but each spouse can qualify for up to $250,000 in tax-free profits if both meet the 24-month occupancy test and file a joint tax return in the year of sale.
The method of holding title doesn’t matter, even if title is held in a living trust. And if two individuals not married to each other both hold title and each owns and occupies the principal residence at least 24 of the 60 months before its sale, then each co-owner qualifies for up to $250,000 tax-free capital gains.
The 24-month occupancy need not be continuous. And if you bought and occupied your primary home as recently as 24 months ago before selling it, you meet the ownership occupancy test.
Also, the property need not be your principal residence on the date of sale. For example, if you occupied your home for at least 24 months during the 60 months before sale, you could rent the house to tenants for as long as 36 months before losing you entitlement.
There is no need to buy a replacement principal residence. This tax break can be used over and over without limit. However, it cannot be used more frequently than once every 24 months.
A Forteva Real Estate advisor can answer any questions you have about the sale of your home!
