<aside> 📚 Selling your primary residence? By understanding and potentially utilizing the primary residence exclusion, you can significantly reduce your tax burden when selling your home and unlock up to $500,000 in tax-free gains.

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Here’s what we’ll cover:

Key details

The primary residence exclusion can significantly reduce your tax burden by allowing you to exclude up to $500,000 in profits from the sale of your primary residence. Let’s see if you qualify and how much you could save!

Eligibility

In order to qualify for the full primary residence exclusion, you must meet all of the following criteria for at least 2 of the last 5 years before the sale (2 our of 10 if you’re active military)

1. Ownership and occupancy: You must have owned and lived in the property
2. Primary residence: You must have lived in the property as your main residence (not as a vacation home)

Exclusion Amount

The maximum profit you can exclude from your income is based on your filing status in the year of the sale:

• Married Filing Jointly: Exclude up to $500,000
• Single: Exclude up to $250,000
• Married filing separately: Each spouse can exclude up to $250,000 if they qualify individually.

Benefits

The primary residence exclusion can result in significant tax savings, depending on your tax bracket.

• Tax-free gains: Reduce your taxable income by excluding a significant portion of your profit from the sale. Depending on your filing status and tax bracket, you could save over $100,000 in taxes.
• Boost your bottom line: Using the primary residence exclusion to reduce or eliminate tax will leave more money in your pocket from the sale. This translates to greater financial flexibility to fund retirement, go on a dream vacation, or achieve other goals.