First-Timer Primer: Taxes and Profit from Selling a Home
✉️ Want to forward this article? Click here.

To help home buyers and sellers both novice and seasoned, UrbanTurf is running a series of primer articles this week about the buying and selling process.
In this First-Timer Primer, we look at an individual’s tax liability associated with the sale of their home.
Here’s the overall picture: For most people, capital gains from selling a home aren’t taxed. The exception is one of the biggest in the tax code — for a single person, up to $250,000 in profit is exempt from obligations to Uncle Sam. If married and filing jointly, that threshold goes up to a comfortable $500,000 exempt from taxation.
story continues below
loading...story continues above
There are a few requirements related to getting the tax break:
1. The home has to be your primary residence. The IRS cares how much time you spend there, where you work, and the addresses you use on your tax returns, driver’s license, voter registration and other affiliations.
2. You have to have owned and used your home for at least two of the five years prior to selling it. The years of “ownership” and “use” don’t have to be concurrent or consecutive, and you don't have to be living in the home at the time of the sale.
If you’ve lived in the home for fewer than two of the previous five years, you’re not completely ineligible for the break, but it will be smaller. A married couple who has only lived in a home for one of the past five years has their tax-exempt profit threshold reduced to $250,000 from $500,000. There are special considerations for people inheriting homes, on active duty in a government position or receiving a home as part of a divorce settlement.
3. You can’t have taken the capital gains exemption on another home within the past two years. The exemption can only be used once every two years.
UrbanTurf encourages readers in complicated tax situations to check with an accountant before claiming the exemption.
Similar Posts:
- First Timer Primer: How Much Cash Do You Need to Buy a House?
- First-Timer Primer: The Mortgage Pre-Approval Process
- First-Timer Primer: How Do Mortgage Payments Work?
- First-Timer Primer: The Escalation Clause
- First-Timer Primer: A Condo Fee Tutorial
See other articles related to: capital gains tax, first-timer primer
This article originally published at https://dc.urbanturf.com/articles/blog/first-timer_primer_taxes_and_profit_from_selling_a_home/9852.
Most Popular... This Week • Last 30 Days • Ever

As a homeowner, it's important to understand the types of insurance you need to prote... read »

The Hoffman & Associates project is having difficultly securing financing.... read »

Today, UrbanTurf takes a look at the residential pipeline southeast of Florida Avenue... read »

While the number of homes on the market is much higher than last year, that probably ... read »

This week’s Best New Listings includes a cozy one-bedroom in Adams Morgan and a fiv... read »
- What Types of Insurance Do You Need When You Own a Home?
- 445-Unit Mixed-Use Development Adjacent to Audi Field Will Be Delayed
- The Nearly 2,500 Units That Could Still Be In The Works For NoMa
- DC-Area Home Prices Set Record In April As Supply Soars
- Best New Listings: In The Middle Of Adams Morgan, In The Woods Of Forest Hills
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Start browsing below!
First-Timer Primers
Intro guides for first-time home buyers
Unique Spaces
Awesome and unusual real estate from across the DC Metro