Tax season is upon us. Many of us have sold real estate owned in the last year.
In order to take advantage of the up-to-$500,000 exclusion of gain (or up-to-$250,000 if you file a tax return as a single taxpayer) the house you sell has to be your “principal residence”. Under most circumstances, we do not need a legal definition of this concept. “This is my house, and I have lived here for many years; what’s the problem.”
But as we all know, life is often not that simple. And, unfortunately, there is no definition provided in the Tax Code.
When you sell your home, there are different tax benefits available to you — depending on whether your home was your principal residence. And the exclusion of gain provision for principal residences was not repealed or even amended in the new tax law that the President recently signed.
