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IRS.gov Website
Publication 554
taxmap/pubs/p554-007.htm#en_us_publink100043628

Sale of Home(p17)

For Use in Tax Year 2013
rule
You may be able to exclude from income any gain up to $250,000 ($500,000 on a joint return in most cases) on the sale of your main home. Generally, if you can exclude all of the gain, you do not need to report the sale on your tax return. You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale.
taxmap/pubs/p554-007.htm#en_us_publink100043629

Main home.(p17)

For Use in Tax Year 2013
rule
Usually, your main home is the home you live in most of the time and can be a:
taxmap/pubs/p554-007.htm#en_us_publink1000240547

Repaying the first-time homebuyer credit because you sold your home.(p17)

For Use in Tax Year 2013
rule
If you claimed a first-time homebuyer credit for your main home and you sell it, you may have to repay the credit. For a home purchased in 2008 and used as your main home until sold in 2013, you must file Form 5405 and repay the balance of the unpaid credit on your 2013 tax return.
For a home purchased after 2008, you generally must repay the entire credit if the home was sold (or otherwise ceased to be your main home) within 36 months of the purchase date. If you purchased your home in 2009 and used it as your main home until sold in 2013, you do not have to repay the credit or file Form 5405. If you purchased your home in 2010 and used it as your main home until sold in 2013, you may have to file Form 5405 and repay the entire credit on your 2013 tax return.
See the Instructions for Form 5405 for more information about repaying the credit and exceptions to repayment that may apply to you.
taxmap/pubs/p554-007.htm#en_us_publink100043630

Maximum Amount of Exclusion(p17)

For Use in Tax Year 2013
rule
You can generally exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true.
You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons.
taxmap/pubs/p554-007.htm#en_us_publink100043631

Ownership and Use Tests(p17)

For Use in Tax Year 2013
rule
To claim the exclusion, you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have:
taxmap/pubs/p554-007.htm#en_us_publink100043632

Exception to ownership and use tests.(p17)

For Use in Tax Year 2013
rule
If you owned and lived in the property as your main home for less than 2 years, you still can claim an exclusion in some cases. Generally, you must have sold the home due to a change in place of employment, health, or unforeseen circumstances. The maximum amount you can exclude will be reduced. See Publication 523, Selling Your Home, for more information.
taxmap/pubs/p554-007.htm#en_us_publink100043633

Exception to use test for individuals with a disability.(p17)

For Use in Tax Year 2013
rule
There is an exception to the use test if, during the 5-year period before the sale of your home: Under this exception, you are considered to live in your home during any time that you own the home and live in a facility (including a nursing home) that is licensed by a state or political subdivision to care for persons in your condition.
If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion.
taxmap/pubs/p554-007.htm#en_us_publink100043634

Exception to ownership test for property acquired in a like-kind exchange.(p17)

For Use in Tax Year 2013
rule
You must have owned your main home for at least 5 years to qualify for the exclusion if you acquired your main home in a like-kind exchange. This special 5-year ownership rule continues to apply to a home you acquired in a like-kind exchange and gave to another person. A like-kind exchange is an exchange of property held for productive use in a trade or business or for investment. See Publication 523 for more information.
taxmap/pubs/p554-007.htm#en_us_publink1000240548

Period of nonqualified use.(p17)

For Use in Tax Year 2013
rule
Generally, the gain from the sale or exchange of your main home will not qualify for the exclusion to the extent that the gain is allocated to periods of nonqualified use. Nonqualified use is any period after December 31, 2008, during which the property is not used as the main home. See Publication 523 for more information.
taxmap/pubs/p554-007.htm#en_us_publink100043635

Married Persons(p18)

For Use in Tax Year 2013
rule
In the special situations discussed below, if you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use test, you can exclude up to $250,000 of gain. However, see Special rules for joint returns, next.
taxmap/pubs/p554-007.htm#en_us_publink100043636

Special rules for joint returns.(p18)

For Use in Tax Year 2013
rule
You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true.
taxmap/pubs/p554-007.htm#en_us_publink1000139168

Sale of home by surviving spouse.(p18)

For Use in Tax Year 2013
rule
If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home.
If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home in 2013.
taxmap/pubs/p554-007.htm#en_us_publink100043639

Home transferred from spouse.(p18)

For Use in Tax Year 2013
rule
If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it.
taxmap/pubs/p554-007.htm#en_us_publink100043640

Use of home after divorce.(p18)

For Use in Tax Year 2013
rule
You are considered to have used property as your main home during any period when:
taxmap/pubs/p554-007.htm#en_us_publink100043641

Business Use or Rental of Home(p18)

For Use in Tax Year 2013
rule
You may be able to exclude gain from the sale of a home that you have used for business or to produce rental income. However, you must meet the ownership and use tests. See Publication 523 for more information.
taxmap/pubs/p554-007.htm#en_us_publink100043642

Depreciation after May 6, 1997.(p18)

For Use in Tax Year 2013
rule
If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. See Publication 523 for more information.
taxmap/pubs/p554-007.htm#en_us_publink100043643

Reporting the Sale(p18)

For Use in Tax Year 2013
rule
Do not report the 2013 sale of your main home on your tax return unless: If you have a gain that you cannot or choose not to exclude, if you received a Form 1099-S, or if you have a deductible loss, report the sale on your tax return. Report the sale on Part I or Part II of Form 8949 as a short-term or long-term transaction, depending on how long you owned the home. If you used your home for business or to produce rental income, you may have to use Form 4797, Sales of Business Property, to report the sale of the business or rental part. See Publication 523 for more information.