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

Sale of Home(p17)

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 don't 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)

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)

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 2015, you must file Form 5405 and repay the balance of the unpaid credit on your 2015 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)

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.
taxmap/pubs/p554-007.htm#en_us_publink100015997

Joint returns.(p17)

rule
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_publink100015998

Reduced exclusion.(p17)

rule
Even if you don't meet the requirements described above, you can still 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 Pub. 523, Selling Your Home, for more information.
taxmap/pubs/p554-007.htm#en_us_publink100043631

Ownership and Use Tests(p17)

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_publink100043633

Exception to use test for individuals with a disability.(p18)

rule
There is an exception to the use test if, during the 5-year period before the sale of your home: If you qualify for 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.(p18)

rule
If you acquired your main home in a like-kind exchange, you must own the home for 5 years before you qualify for the exclusion. This special 5-year ownership rule continues to apply to the home even if you give it to another person. A like-kind exchange is an exchange of property held for productive use in a trade or business or for investment in which no gain or loss is recognized. See Pub. 523 for more information.
taxmap/pubs/p554-007.htm#en_us_publink1000240548

Period of nonqualified use.(p18)

rule
Generally, the gain from the sale or exchange of your main home won't 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 isn't used as the main home. See Pub. 523 for more information.
taxmap/pubs/p554-007.htm#en_us_publink100043635

Married Persons(p18)

rule
Generally, if the home you sold counts as your main home and you are a married person filing separately, the first $250,000 of gain isn't taxable 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 for joint returns discussed under Special rules for joint returns, next.
taxmap/pubs/p554-007.htm#en_us_publink100043636

Special rules for joint returns.(p18)

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)

rule
If your spouse died and you didn't 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 2015.
taxmap/pubs/p554-007.htm#en_us_publink100043639

Home transferred from spouse.(p18)

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)

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)

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 Pub. 523 for more information.
taxmap/pubs/p554-007.htm#en_us_publink100043642

Depreciation after May 6, 1997.(p18)

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

Reporting the Sale(p18)

rule
Don't report the 2015 sale of your main home on your tax return unless: 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 Pub. 523 for more information.