Tax Facts

8676 / How much gain is a taxpayer permitted to exclude from income on the sale of a principal residence? How is the exclusion calculated?

Updated: December 20, 2024 at 04:48 AM
Generally, an individual who sells a principal residence may elect to exclude up to $250,000 of gain from gross income.1 However, married couples filing jointly may exclude up to $500,000 if they meet the following requirements:
(1)  they must file a joint return for the taxable year of the sale or exchange;

(2)  either spouse must meet the ownership requirements outlined in Q 8674;

(3)  both spouses must meet the use requirements outlined in Q 8674; and

(4)  neither spouse is ineligible to use the exclusion because he or she had used the exclusion in the two-year period ending on the date of the sale or exchange.2





1.  IRC § 121(b).

2.  IRC § 121(b).


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