Sale of your Home

One of the best tax breaks we have is the exclusion of $500,000 of gain on the sale of your principal residence for joint sellers and $250,000 for single sellers. To qualify the house had to be your principal residence for at least 2 out of the 5 years prior to the sale. If you provide a written certification to the closing attorney that the property sold was your principal residence and that the full amount of the gain is excludable from gross income, then no reporting is required on your tax return. If you do not provide the certification, then you will get a form 1099S which reports the gross amount of the sale of the property to the IRS. The sale will then need to be reported on the tax return. It used to be that you had to track all of your improvement costs since you bought the property, but for most people that is no longer necessary due to the gain exclusion.