The first-time homebuyer credit has been expanded for homes bought after 2008 and before May 1, 2010 (before July 1, 2010, if you entered into a written binding contract before May 1, 2010). The maximum amount of the credit has been increased, and the recapture rules have changed. You will not have to repay the credit for a home you purchased in 2009 or 2010 if you use it as your main home for the entire 36-month period beginning on the purchase date. (See Reminders, below, and Chapter 37 for details.)

Gain from the sale or exchange of a main home cannot be excluded from income if the gain is allocable to periods of nonqualified use. See Periods of nonqualified use, later.

If you have not deducted all the points you paid to secure a mortgage on your old home, you may be able to deduct the remaining points in the year of the sale. See Mortgage ending early under Points in chapter 23.

If you claimed the first-time homebuyer credit in 2008, and you sold the home or the home stopped being your main home in 2009, you generally must repay the credit. You repay the credit by including it as additional tax on the return for the year your home stops being your main home. For details, see chapter 37.

This chapter explains the tax rules that apply when you sell your main home. Generally, your main home is the one in which you live most of the time.

If you sold your main home in 2009, you may be able to exclude from income any gain up to a limit of $250,000 ($500,000 on a joint return in most cases). See Excluding the Gain, later. If you can exclude all of the gain, you do not need to report the sale on your tax return.

If you have gain that cannot be excluded, it is taxable. Report it on Schedule D (Form 1040). You may also have to complete Form 4797, Sales of Business Property. See Reporting the Sale, later.

If you have a loss on the sale, you cannot deduct it on your return. However, you may need to report it. See Reporting the Sale, later.

The following are main topics in this chapter.

• Figuring gain or loss.
• Basis.
• Excluding the gain.
• Ownership and use tests.
• Reporting the sale.

Other topics include the following.

• Business use or rental of home.
• Recapturing a federal mortgage subsidy.

This section explains the term "main home." Usually, the home you live in most of the time is your main home and can be a:

• House,
• Houseboat,
• Mobile home,
• Cooperative apartment, or
• Condominium.

To exclude gain under the rules of this chapter, you generally must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale.

If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. However, if you sell vacant land used as part of your main home and that is adjacent to it, you may be able to exclude the gain from the sale under certain circumstances. See Vacant land under Main Home in Publication 523 for more information.

You buy a piece of land and move your main home to it. Then you sell the land on which your main home was located. This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land.

If you have more than one home, you can exclude gain only from the sale of your main home. You must include in income gain from the sale of any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

You own and live in a house in the city. You also own a beach house, which you use during summer months. The house in the city is your main home.

You own a house, but you live in another house that you rent. The rented house is your main home.

If you use only part of the property as your main home, the rules discussed in this chapter apply only to the gain or loss on the sale of that part of the property. For details, see Business Use or Rental of Home, later.