Categories: General Tax Terms
Home Sale Exclusion: A provision in the Internal Revenue Code that allows homeowners to exclude a certain amount of capital gains from taxation when they sell their primary residence.
Under this exclusion, individuals can exclude up to $250,000 of gain ($500,000 for married couples filing jointly) if they have owned and used the home as their primary residence for at least two of the five years preceding the sale.
This exclusion can significantly reduce the taxable income from the sale of a home, making it a valuable tax benefit for qualifying homeowners. For example, if a single homeowner sells their home for a $300,000 gain and meets the ownership and use tests, they will only be taxed on $50,000 of the gain.
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