The Federal Tax Code allows married taxpayers to exclude from capital gains taxes up to $500,000 in profits from selling a home (singles can exclude $250,000). In order to qualify for this exemption, you must prove that that the home has been your principal residence for at least two out of the last five years. The establishment of the home as a principal residence depends on the facts of each homeowner's circumstance. Here are two cases to consider.

Homeowner A has lived at 25 Pine Drive for 12 years. Although he stays at his vacation cottage in another town for up to three months out of each year (sometimes more), 25 Pine Drive is his principal residence, where he lives most of the time. When he sells the home, Homeowner A (filing as a single individual) can keep up to $250,000 in tax-free profit.

Homeowner B buys 108 Maple Street, intending to live there. He rents it out while waiting to sell his current home, where he has lived for six years. His principal residence sells at the end of two years. Homeowner B moves into his new house, lives there for three months, and then decides to travel. After a six-month trip, he regrets buying 108 Maple Street and sells it. Even though he has owned the house on Maple Street for over two years, it won't qualify as "owner-occupied", because he only lived in it for a few months. Thus Homeowner B is not eligible to claim the tax exemption when he sells the house on Maple Street.

Consult your tax advisor for advice about your particular circumstance.

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Michael Robles
Coldwell Bankers Previews International
400 Primrose Rd.
Burlingame, CA. 94010
Phone: 650-637-9900
Fax: 650-347-4067
Email: Mike@RealtorRobles.com

As a midpeninsula native, I have spent over 40 years living in one of the world's greatest locations. For almost 20 years my full time business has been practicing real estate in this area. My familiarity with my market place and the wealth of experience that I have gained while negotiating hundreds of transactions over the years is truly an advantage to the clients that I represent. As an agent, I continuously strive to create a comfortable working atmosphere and to promote open and timely communications so that my clients have all the information they require throughout the buying and/or selling process. The areas that I serve are Burlingame, San Mateo, Hillsborough, Belmont, San Carlos, Redwood City, Redwood Shores, Menlo Park, Atherton, Woodside and surrounding areas. To discuss your real estate needs, contact me at (650) 637-9900.

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