When you sell your primary residence, is excluded from taxation up to $250,000 profit
per individual owner when you qualify for the principal residence profit exclusion. When you own your home with another person, together you may exclude up to
To qualify for the exclusion, you need to have occupied the property as your principal residence for at least two of the last five years. When you own your home with another person, you both must be owners and meet the two-out-of-five-year occupancy rule. If
only one of you meets the occupancy rule, then the profit exclusion is limited to $250,000.
However, when you and your spouse have not simultaneously owned and occupied the residence for at least two of the last five years, you still qualify for the $500,000 exclusion if:
• one of you owned the residence;
• you both meet the two-out-of-five-year occupancy rule;
• you file a joint tax return for the year of the sale;
• neither of you has taken a principal residence profit exclusion on another property within two years prior to the sale.
You do not need to occupy the home at the time of sale to qualify for the principal residence profit exclusion under the two-out-of-five-year rule.
If you do not meet the two-out-of-five-year occupancy rule, you do not qualify for the tax exclusion — with one exception.
If you relocated due to personal difficulties, you may still qualify for a partial tax exclusion. Personal difficulties include:
With the personal difficulties exception, when you relocate after occupying the property for less than 24 months, you qualify for a profit exclusion amount equal to the fraction of the ceiling amount ($250,000/$500,000) attributable to the portion of the
24 months you occupied the property.
Call me today with questions about buying a home or selling your home!
Coldwell Banker Residential Brokerage
480.797.4884 / 619.250.6214
I am licensed in California and Arizona and we have offices around the country.
California Bureau of Real Estate Lic. # 01222569
Arizona Department of Real Estate Lic. # BR550696000
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