Tax Aspects of Selling a Home

When selling a primary residence, some sellers pay no income tax on the gain.  Paying taxes on the profit of a home depends on how long you owned and lived in the home, as well as how much money was made. If you lived in the home for at least two of the five years before selling and did not convert the property to investment property, up to $250,000 of the profit is tax-free, or up to $500,000 if you are married filing jointly. If the profit exceeds the $250,000 or $500,000 limit, the excess profit could be subject to capital gain tax. 

There are additional special circumstances to note such as divorce settlement, death of a spouse, military service members, etc. Having an experienced closing attorney on your side that knows the rules helps to navigate this process.