Question

I have a question about capital gains tax on real estate. Regarding the capital gains tax on property, do I need to report the profit I made on the sale of a home I owned for 15 years?

Answer

Regarding capital gains tax on real estate, report the sale of your main home only if you have a gain not excluded from your income. If you have a gain that’s not excluded, you usually must report capital gains tax on property on Schedule D: Capital Gains and Losses.

You can exclude up to $250,000 of the capital gains tax on property if all of these apply:

  • You own the home solely or you own the home with another person but file separate returns.
  • You meet the ownership test. You owned the home for at least two of the last five years ending on the date you sold the home.
  • You meet the use test. You occupied the home as your main home for at least two of the last five years ending on the date you sold the home.
  • During the two-year period ending on the date of the sale, you didn’t exclude gain from the sale of another home.

You can exclude up to $500,000 of the gain if all of these apply:

  • You’re married filing jointly.
  • Either you or your spouse meets the ownership test.
  • Both you and your spouse meet the use test.
  • During the two-year period ending on the date of the sale, you or your spouse didn’t exclude gain from the sale of another home.

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