Count backward to claim home exclusion — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Count backward to claim home exclusion

Get PDF file

by on
in Small Business Tax

Q. For three years, we’ve been renting out the house that we previously used as our principal residence. To qualify for the home-sale exclusion, can we count either the year we converted to rental use or the year of the sale? H.M., Honolulu

A. Sort of. Briefly stated, unmarried people can exclude up to $250,000 of home-sale gain from taxes, while married-filing-jointly people can exclude up to $500,000. You must have owned and used the home as your principal residence for at least two years during the five-year period that ends on the sale date (see the article on page 1). So, this is not a calendar-year concept. Technically, you qualify for the tax exclusion if your ownership and use as a principal residence lasted either 730 days or 24 full months during the five-year period that ends on the sale date. Tip: The use and ownership periods need not be continuous. So, you can resume living in the home as a principal residence if that would help you meet the two-year use requirements.

Related Articles...

Leave a Comment

 

Previous post:

Next post: