In the United States, a U.S. tax resident is required to report all income from whatever source derived and pay taxes on those gross earnings. Taxable income includes the amount of capital gain you realize on the sale of the real estate or other property.

If you sell your home for more than you bought it, the sale of the property creates a taxable capital gain (either long-term or short-term), which must be reported on your Form 1040 federal tax return. Many homeowners find themselves in a position where they sold their main home for a large capital gain.

So the big question is, do you have to pay capital gains taxes on the sale of the real estate?

Enter the principal residence exclusion...

If you own and live in a property for at least 2 of the last 5 years, you can qualify for the principal residence exclusion, which exempts up to $250,000 or $500,000 of gain on the sale of the home, depending upon your filing status.

In this course, we examine the rules surrounding the principal residence exclusion, how to calculate your exclusion, and how to report the exclusion on your Form 1040 and related schedules (Form 8949, Schedule D, Form 1099-S).

The following topics will be covered:

1. What is the principal residence exclusion?

2. How does a single person or a married couple qualify for the exclusion?

3. What are the maximum dollar amounts that can be excluded?

4. If you sell the property too early and don't meet the holding period requirements, what are your options?

5. How to calculate a prorated amount of the exclusion?

6. How is the gain exclusion reported on the tax return?

The materials are designed to help virtually any U.S. taxpayer assess their principal residence tax exclusion. Enjoy!