question.jpgIn Federal Income Tax

I sold my home for a substantial profit. How is it taxed?

A homeowner can exclude up to $250,000 ($500,000 for a married couple) of gain realized on the sale of a house, as long as the homeowner(s) owned the house and used it as the principal residence for at least two of the five years prior to the sale. If you do not realized $250,000 gain ($500,000), you don’t have to report the sale of a home to the IRS, so long as it is your principal residence. Keep in mind that you can also deduct the costs of improvements and closings cots when factoring the $250,000 exclusion, and you only have to pay taxes on the gain over $250,00K.