June 13, 2006 - Taxes and Your House Most of our clients profit from selling their homes, and they often have questions about capital gains tax. When you sell your home, you are not taxed on your profits if (1) you have lived in the home for two out of the last five years and (2) your gain does not exceed $250,000 as a single taxpayer or $500,000 as a married couple filing jointly.
Gains above the limit are taxed at the current rate of 15% for higher income taxpayers and 5% for lower income taxpayers. Whatever your age, you are free to invest all of your gain, any part of it, or none at all in another home without further tax consequences. Homeowners can use this tax-free provision every two years.
According to the American Job Creation Act of 2004, properties converted from a 1031 exchange property into a primary residence must be used as a primary residence for at least five years to qualify for the tax exemption. Consult your tax accountant regarding your particular circumstance. | 
