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.

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