Capital Gains Tax Loopholes On A Primary Residence

The principles surrounding the capital gains tax primary residence generates on an average transaction are not written in stone. In fact, the IRS has several provisions that are clear cut tax loopholes that you can take advantage of if you’d like to sell your primary residence.

The $500,000 Rule

If you are interested in taking advantage of tax loopholes on your primary residence, all you really need to do is prove that you were living at the residence for at least two of the five years before the sale. If you can do this, you get $250,000 in capital gains exemptions or $500,000 if you were living in the residence with a spouse during that period of time.

If you want to take advantage of this rule however, you need to have accurate record-keeping. The IRS is notorious for coming after people if they smell a rat, so don’t give them the odor of something gone rotten. You can sell your house and avoid having to pay any capital gains on it if you are able to show residency in your primary residence for at least that period of time.

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