When selling a primary residence, homeowners may qualify for a valuable tax benefit known as the capital gains home sale exclusion.

Under current IRS rules, single homeowners can exclude up to 250,000 in profit from capital gains taxes, while married couples filing jointly may exclude up to 500,000, as long as they have owned and lived in the home as their primary residence for at least two of the past five years. This exclusion can generally be used once every two years.

If your profit exceeds these limits, the remaining amount may be subject to capital gains tax, which makes accurate record keeping essential. Your purchase price, selling costs, and qualifying home improvements all factor into the final calculation. Certain situations such as military service, divorce, or unexpected life changes may qualify for special exceptions. Planning ahead and consulting a tax professional can help homeowners make informed decisions and potentially reduce their tax exposure when selling.

Shared by Linda Archie, Moving Seniors Forward co-founder and Seniors Real Estate Specialist at Equity Union.