top of page

How to Claim the Capital Gains Tax Exclusion on the Sale of Your Home | Home Sale Tax Exclusion

Attorney Thomas B. Burton discusses the steps to take to claim the capital gains tax exclusion on the sale of your home. Attorney Burton also discusses the form you should complete upon the closing of the sale of your home in order to document your qualification for this valuable capital gains tax break.

Subscribe Burton Law LLC:

Transcript of Video: How to Claim the Capital Gains Tax Exclusion on the Sale of Your Home

This video is a follow-up on my video

about how you can sell your home and pay

zero capital gains tax and the thing I

want to emphasize here is that when you

go to sell your home if you know you

owner-occupied it in two out of the

previous five years you want to let your

title company know that so they prepare

this certification at the closing and

each title company will have their own

form but this is an example the IRS puts

on their site and it goes through about

six questions you got to answer here and

certify that it was a primary residence and

I'm just going read the top couple to

show you what it's like and you're going to

put in your name the address of the

property and your tax payer ID number

which is your social security number

and then it's going to have true/false

questions and it's going to say I owned and

used the residence as my principal

residence for periods aggregating two

years or more during the five year

period ending on the date of the sale or

exchange of the residence so that's the

key thing there is that two out of five

years it had to be your primary

residence in order to qualify for this

capital gains tax exclusion then the

second one is I have not sold or

exchanged another principal residence

during the two-year period ending on the

date of the sale or exchange of the

residence so if you remember my other

video I said if you aren't currently

living in the home but it was your

principal residence for two out of the

last five years you can use this capital

gains exclusion only once every two

years so if you move to some other home and

then sold that and recently used it then

you can't go back and use this one until

two years goes by but for most folks if

you just do it once every two years

you're going to be fine

and then it goes down from there for

additional questions about whether

you're single or married but again just

a reminder from my other video if you're

single you can exclude up to $250,000 in

capital gains and if your married it doubles up

to $500,000 and if you're married they're

going to ask questions of you and your

spouse to make sure you both live there

as your primary residence for that two

out of the previous five years so watch

my other video on how all the mechanics

of the exemption works but in general in

that video I talked about how a lot of

people are going to fall into that 15%

capital gains tax rate because for a

single person if you make between

$39,000 and $434,000 and change your

long-term capital gains tax rate is 15

percent and for a married couple you can

make between around $78,000 to $488,000

and you're going to

fall into that fifteen percent capital

gains tax bracket so if you take the max

gain for a single person of $250,000

at fifteen percent that's up to $37,500 in

capital gains you can exclude tax-free

on the sale of your primary

residence and for a married couple

that's doubled to $75,000

so as I've stated previously

that's one of the best tax breaks out

there I know of and if you're looking at

selling your primary residence go

through that test and make sure you're

hitting that two out of five-year rule

so that you can take advantage of this

great tax break on the sale of your

primary residence so thanks for watching

and we'll see you next time!

© 2020 Burton Law LLC. All Rights Reserved.

Transcript and captions provided for ease of access for the hearing impaired.

For questions about this topic, or to suggest a topic for a future blog post, please contact my office.

19 views0 comments


bottom of page