The Federal Tax Code allows married taxpayers to exclude from capital gains taxes up to $500,000 in profits from selling a home (singles can exclude $250,000). In order to qualify for this exemption, you must prove that that the home has been your principal residence for at least two out of the last five years. The establishment of the home as a principal residence depends on the facts of each homeowner's circumstance. Here are two cases to consider.

Homeowner A has lived at 25 Pine Drive for 12 years. Although he stays at his vacation cottage in another town for up to three months out of each year (sometimes more), 25 Pine Drive is his principal residence, where he lives most of the time. When he sells the home, Homeowner A (filing as a single individual) can keep up to $250,000 in tax-free profit.

Homeowner B buys 108 Maple Street, intending to live there. He rents it out while waiting to sell his current home, where he has lived for six years. His principal residence sells at the end of two years. Homeowner B moves into his new house, lives there for three months, and then decides to travel. After a six-month trip, he regrets buying 108 Maple Street and sells it. Even though he has owned the house on Maple Street for over two years, it won't qualify as "owner-occupied", because he only lived in it for a few months. Thus Homeowner B is not eligible to claim the tax exemption when he sells the house on Maple Street.

Consult your tax advisor for advice about your particular circumstance.

	See All Tips In The "First Time Buyers" Category >
	See Complete Library Of Hundreds Of Tips In 30+ Categories >

Doug & Sherry Lawrence
Prudential Realty Center
1315 Taft Highway
Signal Mountain, TN 37377
Finds Me: 423-308-7616
Fax: 423-598-7398
Doug's Cell: 423-802-2014
Sherry's Cell: 423-838-5011
Office: 423-886-2601 ext. 216
Chattanooga Home Finders: DougandSherry@NUMBER1EXPERT.com
Sherry's Direct: dslawren@ix.netcom.com
Doug's Direct: douglawrence@ix.netcom.com
Sherry's Office Email : slawrence@realtycenter.com
Doug's Office Emal: dlawrence@realtycenter.com

Licensed in Tennessee and Georgia, and serving Hamilton County, Chattanooga, Signal Mountain, Ooltewah, Lookout Mountain, Red Bank, East Ridge, Brainerd and East Brainerd, Soddy Daisy, Hixson, Tiftonia, Marion County, Bradley County, and North Georgia, The Lawrence’s have assembled a highly professional and experienced 9 member team to help with a dynamic and growing Residential, Land, and Commercial Real Estate business. Our Team Concept creates a tremendous synergy for our clients and serves to make sure a Lawrence Team member is always available to help you when you need them! Our goal is always the same - to be sure all your needs are met and your expectations exceeded! For Buyers - To find the right home, in the right location, and at the right price! For Sellers - To professionally market your home, to the right audience, for the right price, with fast and effective results. And, for those Business Professionals who are charged with making certain that their employees Real Estate needs are professionally managed, we, along with our Real Estate Team, and our Mortgage and Insurance Professionals, promise to make sure every step of the home buying or home selling service exceeds your expectations!

www.ChattanoogaHomeFinders.com is brought to you by The Lawrence Team
NUMBER1EXPERT™ in real estate for Chattanooga, Signal Mountain and Ooltewah, Tennessee

Read The Lawrence Team's Privacy Guarantee, Terms of Service, and Free & Without Obligation Pledge