Selling your home at a profit? You may be eligible to notpay tax on the first $250,000 of gain from the sale, or up to $500,000 on a joint return. To do this, you must meet answer “yes” to key tests. Use this checklist to determine your eligibility:
__1. Is the home being sold your main home?
__2. Will you have owned it for at least 2 of the 5 years preceding the date of sale? For married couples, only one spouse must be the owner for these 2 years as long as they file a joint return.
__3. Will you have used the home as your main home for at least 2 of the 5 years preceding the date of sale? Disregard short absences, such as vacations.
__4. Has it been at least 2 years since you’ve used this home sale exclusion? If you never claimed it before, skip this question.
__5. If you don’t meet the 2-year ownership and use tests, was the sale due to a job change, health problem, or unforeseen circumstance?Unforeseen circumstances include such events as divorce, death, or unemployment.
The average tax rate for all income tax returns filed in 2006 was 13.8% (up from 13.6% in 2005). The top 5% of filers (those with adjusted gross income over $153,542) paid 60.1% of the total federal income taxes paid by all filers.
Source: Winter Statistics of Income BulletinView all factoids