Federal taxes can be required when you sell a home. The tax will vary depending on whether the home is your primary residence or a vacation home or rental property. Full tax rules can be complicated and should be thoroughly understood when completing tax forms.

Amount of sale:

Taxes will be required if the profit from the sale of the home is more than $250,000 for a single homeowner and $500,000 for a married couple. If a spouse dies within two years before the sale of the home and the seller did not remarry they are considered married for tax purposes.

Taxes will be based on the amount realized from the sale and the adjusted basis. The amount realized is the selling price minus qualified expenses occurred during the sale. The basis is the original home price plus or minus improvements, additions, special assessments or energy credits, adoptions credits and easement payments received. This is only a partial list of all the factors that can be involved in determining basis.

Primary residence:

For a home to qualify as a primary residence the seller must live in the home for two out of the five years immediately before the sale of the home. If portions of the property were used for business purposes additional tax rules apply.

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