Is the money from sales of a resident home taxable in U.S. ?

Question

Is the proceed from the sales of a primary residence home taxable in U.S. Federal and/or Massachusettes State systems ?

I was told if the gain is less than $500K then the proceed is not subject to either taxes, is this correct ?

Answer 1

Maybe.

If you lived in the home as your principal residence for 2 of the 5 years immediately prior to the sale you may be able to exclude part or all of the gain from the sale. The exclusion amount is $250,000 if your filing status is Single or $500,000 if your filing status is Married Filing Jointly.

MA follows Federal law on the exclusion so if you qualify for it, not tax is due at all.

If you do not qualify for the exclusion then the gain is treated as a captial gain and taxed accordingly.

Answer 2

It's sort of correct, subject to certain rules.

If you lived in the home for two years out of the five years immediately prior to the sale, and owned it for two of those same five years, then you can exclude up to $250K of gain from being taxed - $500K if married filing a joint return. You can do this as long as you didn't exclude the gain from a previous home sale in the past 2 years.

Answer 3

A married couple can sell their main residence that they have lived in for 2 of the previous 5 years and exclude up to $500,000. of gain. For a single person the gain would be $250,000. that is not taxed. The 5 years would be backwards from the date of sale, the two year period they occupy the house does not have to be continuous..

Answer 4

Sold my home last year and didn't have to pay anything. I'd lived in it for 15 years though.

I can't remember the publication number that explains more.

Here's a search from the irs website and should help you find the answer that's applicable to your situation.

http://search.irs.gov/web/query.html?col=allirs&charset=utf-8&qp=&qs=-Wct%3A%22Internal+Revenue+Manual%22&qc=&qm=0&rf=0&oq=&qt=sale+of+home&search.x=0&search.y=0&search=%26%24self.text%28u%27search%27%29%3B