Saul's Notes

Blog by Saul Klein

San Diego, California

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Tax Tip #1 - Sale of a Personal Residence

Posted at Saul's Notes by Saul Klein

Dec. 15, 2005

Categorized in: Tax Tips

Tagged with: tax tips

The Capital Gains exclusion for personal residences sold after May 6, 1997, is $ 500,000 for married couples filing jointly and $ 250,000 for singles.

During the five year period ending on the date of sale, the taxpayer is required to own the home for at least 2 years and lived in the home, as the taxpayer's main home for at least 2 years. This exclusion can only be used once in two years unless the house is sold due to an illness or a job move.

Taxpayers that have Capital Gains exceeding $ 500,000 ($250,000 single) on personal residence sales after August 4, 1997, cannot defer taxes by purchasing a more expensive house. The rollover rule has been repealed (remember IRC Section 1034?).

Saul

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1. 250,000, 500,000 and domestic partnerhips;-)

Written by: Anonymous

Mar. 31, 2006

Thanks for the reminder that married people can deduct twice the capital gains upon sale of a residence in comparison with single individuals. In California they've recently allowed for transfer of title from singles to community property for registered domestic partners -- without the shift triggering a property re-assessment for tax purposes. Domestic partners can't file federal taxes jointly, but does it seem that each co-owner of the residence would be able to deduct $250K? Any comment would be appreciated.

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