If you sell your home during the year, you may be able to exclude some or all of the gain from your return. This exclusion—up to $250,000 for individuals and $500,000 for married taxpayers filing joint returns—can be claimed more than once.
If you have claimed the exclusion in the 2 year period before the sale date of this home, you cannot claim the exclusion again.
To exclude the gain on your main home from your return, you must meet both the Ownership and Use tests.
Ownership Test: You must have owned the home for at least 2 years in the 5-year period ending on the date of the sale. Note: Only one spouse must meet the Ownership Test to claim the exclusion on the return.
Use Test: You must have lived in the home as your main home at least 2 years during the 5-year period ending on the date of the sale. Note: Each spouse must meet the Use Test in order to take the exclusion on the return.
The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time.
To report the gain and the exclusion on your return, go to the
- Federal Section
- Capital Gains and Losses, Schedule D
- Sale of Main Home Worksheet
If you do not meet these tests, you may still be allowed to exclude a reduced amount of the gain realized on the sale of your home. But you must have sold the home for other specific reasons such as serious health issues, a change in your place of employment, or certain unforeseen circumstances such as a divorce or legal separation, natural or man-made disasters resulting in a casualty to your home, or an involuntary conversion of your home.
The IRS does not allow you to claim a loss on the sale of the Main Home. For more details and information see IRS Publication 523, Selling Your Home.