If you have a gain from the sale or exchange of your main home, you may
be able to exclude from income all or part of the gain, please refer to Publication 523 for more information on the gain exclusion. The exclusion
may be allowed each time you sell or exchange your main home, but generally
no more frequently than once every two years. You cannot deduct a loss from
the sale of your main home.
If you sold your home under a contract that provides for part or all of
the selling price to be paid in a later year, you made an "installment sale."
Refer to Topic 705 for more information.
To be eligible for an exclusion, your home must have been owned by you
and used as your main home for a period of at least two years out of the five
years prior to its sale or exchange. The required two years of ownership and
use during the five–year period ending on the date of sale do not have
to be continuous. You can meet the ownership and the use tests during different
two year periods. However, both tests must be met during the five–year
period ending on the date of the sale or exchange.
If you did not meet the ownership and use tests, or if during the two–year
period ending on the date of the sale or exchange you sold or exchanged another
home at a gain and excluded all or part of that gain, you may be allowed to
exclude the gain realized on the sale or exchange of your home if:
- You sold or exchanged your home due to a change in place of employment
or health or unforeseen circumstances.
Report the sale or exchange only if you have a gain that is not excluded
from your income. If you have a gain that is not excluded you must report
it on Form 1040, Schedule D (PDF).
For additional information, refer to Publication 523, Selling Your
Home.
If you were on qualified extended duty in the U.S. Armed Services or the
Foreign Service you may suspend the five-year test period for up to 10 years.
You are on qualified extended duty when, for more than 90 days or for an infinite
period, you are:
- At a duty station that is at least 50 miles from the residence sold, or
- Residing under orders in government housing.
