Home Sate Exemption

Home Sate Exemption

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Age 55 Or Over Home Sate Exemption

It was the right of an individual age 55 or over to sell, once in a lifetime, a principal residence at a gain and to exclude up to $125,000 of this gain from taxation, regardless of whether or not another home is purchased. The individual must have used the properly that was sold as a principal residence for 3 of the last 5 years. The election is binding on both taxpayer and spouse. Former IRC (check if this IRC provision is current here) §121.

Example of Home Sate Exemption:

Learn more about tax examples, explanations and calculations here.

Samuel, who is 56 years old, sells his principal residence, in which he has lived in for the past 3 years, at a $150,000 gain. He may exclude $125,000 of the gain from taxation, even if he does not buy another home. The remaining $25,000 is taxable as a capital gain. Former IRC (check if this IRC provision is current here) §121.

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.


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