If you sold or exchanged your home after May 6, 1997 you may be allowed to exclude
up to $250,000 of gain ($500,000, if married filing a joint return) realized on the
sale or exchange of your main home. The exclusion is allowed each time you sell or
exchange your main home, generally no more frequently than once every two years.
If a sale or contract was signed after May 6, 1997 but before August 5, 1997, you may
use the postponement provision or the $125,000 one time exclusion. Select
Topic 702./p>
If you sold your home under a contract that provides for part or all of the selling
price to be paid in a later year, you made an installment sale. Select
Topic 705 for more information.
To be eligible for an exclusion, your main home must have been owned by you and used
as your main home for a period of at least two years out of the five years prior to its
sale or exchange. You can meet the ownership and use tests during different two year periods.
However, both tests must be met during the five-year period ending on the date of the sale.
If you and your spouse file a joint return for the year of the sale, you can exclude gain if
either of you qualified for the exclusion.
The maximum amount of gain you can exclude will be reduced if:
- You owned a home on August 5, 1997,
- You sold your home prior to August 5, 1999 and did not meet the ownership and use
tests or,
- Due to a change in health or employment you either did not meet the ownership and
use tests or are excluding gain on the sale of another home after May 6, 1997.
Beginning in 1998, Form 2119 is no longer used to report the sale of a home. If
you sold your main home in 1998, report the sale only if you have a gain that is
not excluded from your income. As mentioned above, you may be able to exclude
a gain up to $250,000 ($500,000 on a joint return in most cases). If you cannot
exclude all of the gain, report the sale on
Schedule D (Form 1040),
Capital Gains and Losses.
For additional information on selling your home obtain
Publication 523,
Selling Your Home. Forms and publications can be
downloaded from this site,
or ordered by calling 1-800-829-3676.
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