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Tax Savings for Residence Sales

You may avoid tax on gain on the sale of a principal residence if you owned and used it for at least two years during the five-year period ending on the date of sale. If you are single, you may avoid tax on up to $250,000 of gain, $500,000 if you are married and file jointly.

  • If you used the residence for less than two years, you may avoid tax if you sold because of a change of job location, poor health, or unforeseen circumstance.
  • You may not deduct a loss on the sale of a personal residence. Losses on the sale of property devoted to personal use are nondeductible. However under limited set of conditions you may claim a loss deduction on the sale of a residence.
  • If you rent out a residential property and you or family members also use the residence during the year, rental expenses are subject to the special restrictions.