Capital Gains Exclusion Quiz: Do You Qualify for Section 121?
Section 121 lets many homeowners exclude up to $250,000 of gain from tax, or $500,000 filing jointly. These questions check whether you're likely to qualify.
Example
A couple filing jointly who lived in the home for two of the last five years can usually exclude up to $500,000 of gain, or $250,000 filing alone. The two years don't have to be continuous.
This explains how it works. It isn't legal or tax advice. For your situation, talk to an attorney or CPA.
Step 1 of 5
Owned it at least 2 years?
Questions people ask
- How much gain can I exclude?
- Up to $250,000 if you file alone and up to $500,000 if you file jointly, when you meet the ownership and use tests.
- What is the two-out-of-five-year rule?
- You generally need to have owned the home and lived in it as your main residence for at least two of the five years before the sale. Those two years need not be continuous.
- Can I use it more than once?
- Generally once every two years. There are partial exclusions for moves caused by work, health or other unforeseen circumstances.
- Is this tax advice?
- No. It is a rough eligibility check. Talk to a CPA before you make a decision that depends on the answer.
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