Tax Tips: Selling your home

If you sell your personal residence and you make a profit, you may not have to pay taxes on all or part of it. You don't have to pay tax on the capital gain of up to $250,000 per spouse, provided that you pass certain tests.

You must have owned the house for at least two out of the last five years. You also must have lived in the house for at least two of the last five years. If you don't fully meet both of these tests, you might still be able to get out of paying tax on at least part of the profit from the sale if you had to sell the house because of a change in place of employment, divorce, natural disaster, or certain other unforeseen circumstances.

More information about the tax reporting rules for the sale of your home can be found in IRS Publication 523, Selling Your Home.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.