You may not have to pay any tax at all on the sale of your home.
You can find a clear explanation of the rule on this on the IRS website under Sale of Home – Real Estate Tax Tips. Generally, if you owned the home at least two years before the sale and lived in it as your main residence for at least two years in the last five, you do not owe income tax on the proceeds unless you had a “gain” of more that $250,000 on the sale (or $500,000
if you file a joint return with your spouse.) You need IRS Publication 523, Selling Your Home, and the worksheets in it to calculate whether you have a “capital gain” on the sale and whether you will owe federal income taxes.
Comments are closed.