Capital Gains Tax Exemptions On Real Estate

Q. Can you give me some information on the capital gains exemption for real estate?

A. Exemptions from capital gains taxes (CGT) on real estate are as follows: an individual can exclude up to $250,000 ($500,000 for a married couple filing jointly) of capital gains on the sale of real property if the owner used it as primary residence for two of the five years before the date of sale. The two years of residency do not have to be continuous. You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale. There are allowances and exceptions for military service, disability, partial residence and other reasons.

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