This chapter explains the tax rules that apply when you sell your main home. Generally, your main home is the one in which you live most of the time.

Gain. If you have a gain from the sale of your main home, you may be able to exclude from income up to a limit of $250,000 ($500,000 on a joint return in most cases).

Loss. You cannot deduct a loss from the sale of your main home.

Worksheets. Publication 523, Selling Your Home, includes worksheets to help you to figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the amount of the gain that you can exclude.

Reporting the sale. Do not report the 1998 sale of your main home on your tax return unless:

• You have a gain and do not qualify to exclude all of it,
• You have a gain and choose not to take the exclusion, or
• You made the choice described next under Who may need to read chapter 3 in Publication 523, and you have a taxable gain. ~

You will report taxable gain on the sale of your main home on Schedule D (Form 1040).

Who may need to read chapter 3 in Publication 523. Chapter 3 of Publication 523 explains the rules that applied to sales before May 7, 1997. You may choose to use those rules if you are in either of the following situations.

1. You sold your main home at a gain before May 7, 1997, and either:
   1. Bought your new home in 1998 or later, or
   2. Did not buy a new home within the replacement period.
2. You sold your main home at a gain after May 6, 1997, made the choice to use the rules for sales before May 7, 1997, and either 1(a) or 1(b) above is true. ~

If you are in either of these situations and have questions, see Publication 523.

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