This year as well as last we saw several clients who have sold their primary residence.
The sale of your principal residence for a gain creates potential tax issues if over the exclusion. Granted these are hopefully long-term capital gains, taxed at the lower 15% cap gain rate, but a taxable gain none the less.
If you haven’t sold your primary residence in the last 5 years you may be eligible for a $500,000 exclusion. This exclusion is a great catch all for those who are horrible record keeping on home improvements over the years.
If you bought your home for $200,000 and sell for $600,000, the exclusion covers the $400,000 gain. The exclusion is $250,000 for single filers and $500,000 for joint filers.
Alas, if you sell your home for a loss, it is all yours alone no tax benefit. Uncle Sam is only you friend on gains, losses are not deductible.