If you sell your home for a profit, the IRS considers this a taxable capital gain. This rule applies to all home sales, including vacation or investment properties. However, if you sell your primary residence, you may be able to exclude $250,000 of gain for individuals and $500,000 for married couples from your taxes. As a result, in most cases, it’s unlikely that you will owe taxes on the sale of your home. Here’s how it works.

Home Sale Exclusion

For the most part, the rules around real estate and capital gains don’t change based on the nature of the underlying property. If you sell a house and make money, that profit is considered a taxable capital gain. 

However, there is a broad exclusion for the sale of your primary residence. When you…

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