Profit for Selling Your Home
According to the IRS, “you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse,” provided that you’ve owned your home and used it as your primary residence for minimum two years in the past five years prior to selling your home.
Due to the Taxpayer Relief Act of 1997 which significantly changed how capital gains are treated and taxed, you can benefit from up to $500,000 of tax-free income during your golden years. For instance, if you bought your home for $200,000 and sold it for $800,000, it means $500,000 of your $600,000 profit will be tax-free.
The IRS usually taxes almost everything you purchase, from cars, boats, to real estate and investments; therefore, it’s essential that you make use of capital gains exclusions every chance you get.