What are the current IRS rules on capital gains,i.e., selling a house?

Answer 1

If you live in the house and its your first house sale , you dont have to pay capital gain tax on it. But if youre selling a house you dont live in, even if its the first time, you do have to pay capital gains tax. bettyk

Answer 2

If you own the house for at least two of the five years immediately before the sale, and live in it as your main residence for two of those same five years, then you can exclude up to $250K of gain ($500K if married filing a joint return) when you sell it, if you didn't exclude the gain from another home in the 2 years immediately prior to the sale. If you owned and/or lived in the home for less than two years, you might be able to prorate the exclusion depending on why you moved - job moves, health issues, or other unforseen circumstances can qualify.

If you can't exclude all of your gain, then the rest would be subject to capital gains tax.

The rules changed on taxability of home sales a few years ago. There is no longer an age requirement for the exclusion, or any requirement to reinvest the proceeds in another home.

Answer 3

If you sell your principal residence and live in it for 2 of the 5 years prior to the date of sale, you can exclude up to $250,000 in gain if single or $500,000 in gain if married filing a joint return from taxes.

If you lived in it for less than 2 of the 5 years, you can get a pro-rated exclusion amount.

Any gain above the exclusion amount is treated as capital gains and is taxable. If you owned the mome for more than 1 year, it's a long term capital gain and is taxed at the lower long-term capital gains rate, normally 15%. If you owned it for one year or less, it's treated as a short-term capital gain and is taxed at your marginal rate.

Answer 4

The first two responses most likely told you all you really wanted to know. I believe the exclusion of gain for a property that you use to live in is conditional that the funds are put into another residence.