Financial Planning for Generation X & Y Women
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Expert Q&A Archive

Is there a cap on how much you can earn on the sale of a home?
I was under the impression that there's a very large value associated with the amount of money you can earn on a home sale, and that it would really be a significant amount of home improvements that would put you outside that category. For some reason, I thought it was something in the neighborhood of $1 million. Is there a cap on how much you can earn on the sale of a home?
Rosemary Ervin, CPA:
expert info »
The gain on the sale of the residence is the difference between the selling price (less selling expenses) and your basis (what you paid for it plus capital improvements, see item 1). You can exclude up to $250,000 ($500,000 if married filing jointly) of the gain when you file
your tax return in the year of the sale. The gain can be pretty large if you held the residence for many years. Likewise, it may be a loss, but loss on the disposition of a residence is a non-deductible loss.
Gail Rosen, CPA:
expert info »
You get an exclusion of gain of $250,000 on the sale of your residence (and $500,000 if you are married and own the house). You must live there 2 of the last 5 years. The formula is sales price cost basis = gain on sale. Cost basis = purchase price + improvements. But, the tax law can change by the time you sell your house so always save all of your improvement receipts.
Jody Rorick, CPA:
expert info »
There is no cap on how much you can earn from selling a home. Just be sure your records are accurate.