Question

I have a question about capital gains tax exemption. If I had to sell my house to relocate for a new job, can I exclude my capital gains?

Answer

If you meet the conditions for a capital gains tax exemption, you can exclude up to $250,000 of gain on the sale of your main home. Certain joint returns can exclude up to $500,000 of gain. You must meet all these requirements to qualify for a capital gains tax exemption:

  • You must have owned the home for a period of at least two years during the five years ending on the date of the sale.
  • You must have used it as your main home for at least two years during the past five-year period after the sale or exchange.
  • You can’t have used the exclusion for any home sold or exchanged during the two-year period. This period ends on the date of the current sale or exchange.

If you don’t qualify for the full capital gains tax exemption exclusion, you’ll be able to get a reduced exclusion with an exception. There’s an exception if all of these apply:

  • You sold the home due to a change in employment.
  • You didn’t meet the ownership and use tests.

This applies if you started work with a new employer or continue working with the same one in at a different place. It also can mean the start or continuation of self-employment.

If the change occurred when you used the home as your main home, this can be considered the reason you sold your home. Your new place of employment must be at least 50 miles farther from your former home than was your former place of employment.

Related Topics

Related Resources

Understanding Your Closing Disclosure | H&R Block

What is a closing disclosure? When you buy a house, you will receive a closing disclosure that can benefit you at tax time. Learn more at H&R Block.

Holiday Bonus Taxes

Congratulations on the Bonus! Learm more about the tax rate at H&R Block - whether you receive a holiday or cash bonus, it will apply to you.

How To Offset Capital Gains | H&R Block

Understanding how to offset capital gains is a topic that many tax filers avoid. Brush up on key terms and the process with advice from H&R Block tax pros.

Bitcoin, Taxes, and the Modern Entrepreneur | H&R Block

Many entrepreneurs find themselves wondering exactly how Bitcoin is taxed. Our H&R Block Tax Pros are prepared to assist self-employed filers with Bitcoin taxation.