Are you selling your primary home? Pre-1997 (yes, I know that was a while back), you needed to invest any gains from the sale of your home into another home to qualify for the tax exclusion. However, today that is no longer the case. In today’s world, if you sell your home as a single person, you get a $250,000 exclusion and if you are married, you qualify for a $500,000 exclusion. To qualify, you must live 2 years of the last 5 years in that house as your primary home.
But is There a Catch?
So, what if you lived in the home 2 years and rented the same home for 3 years and then you sell your home? Well you still may qualify for the entire capital gains deduction if properly calculated which would make the home sale tax free. This would bring a $250,000 exclusion if you are single, or a $500,000 exclusion if you are married.