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Exclusion - Sale of Home

You can avoid paying taxes on the first $250,000 of profits on the sale of a home if you are single, or the first $500,000 if you are married. Generally, you must own and live in the home two of the last five years. If you did not own and live in the home two of the last five years, you still may be able to use a prorated exclusion amount in certain situations (for example, if you move because of your job). The excludable amount is modified when a portion of the home is used for business purposes. If you are getting ready to sell your home, it is time to calculate the basis of your property for tax purposes. If you have saved your Form HUD-1 from closing, you can add the attorney's fees, surveys, agent's commissions, title searches, recording fees, and the transfer and stamp taxes to the basis. You may also add the cost of improvements you have made to the property.