Tax Facts

8676 / How much gain is a taxpayer permitted to exclude from income on the sale of a principal residence? How is the exclusion calculated?

Generally, an individual who sells a principal residence may elect to exclude up to $250,000 of gain from gross income.1 However, married couples filing jointly may exclude up to $500,000 if they meet the following requirements:
(1)  they must file a joint return for the taxable year of the sale or exchange;

(2)  either spouse must meet the ownership requirements outlined in Q 8674;

(3)  both spouses must meet the use requirements outlined in Q 8674; and

(4)  neither spouse is ineligible to use the exclusion because he or she had used the exclusion in the two-year period ending on the date of the sale or exchange.2

1.  IRC § 121(b).

2.  IRC § 121(b).

|
Tax Facts Premium Tools
Calculators
100+ calculators specifically designed to help you easily assist clients with specific planning situations and calculations.
Practice Guidance
Designed to help you discover new ways for which to build and maintain client relationships.
Concepts Illustrated
Specifically designed to help you easily assist clients with specific planning situations and calculations.
Tax Facts Archives
Access to the entire library of Tax Facts dating back to 2012 allowing you to look up the exact tax figures from prior years.