Tax Realty Consultant

Taxpayers who sell their principle residence can keep tax free up to $500,000 in profit if they file singly. The property must have been owned and used as the principle residence for any of the prior years. Homeowners can shelter the profits on the sale of a home as often as once every two years. If the two-year use and ownership tests are not met, but the home is sold because of special circumstances (for example loss of job or health problems, etc.) the exclusion is prorated. Otherwise, gains above $500,000 or $250,000 are taxed at current capital gains rates, which vary depending on your tax bracket. Homeowners should continue to maintain records of selling and improvement expenses because some states still tax capital gains on home sales. In addition, those expenses can be used to determine your tax basis once you sell your home. Some Real Estate transactions may need additional research, as always consult your CPA or tax preparer.

http://lehighvalleyrealty.blogspot.com/2007/11/pocketing-profits-when-you-sell.html