Capital Gains Exclusion
A tax rule letting most homeowners exclude a large chunk of profit from taxes when they sell their primary home.
In plain English
The IRS lets qualifying homeowners exclude up to $250,000 ($500,000 for married couples filing jointly) of profit from the sale of a primary residence from capital gains tax, as long as ownership and residency requirements are met.
Keeping records of your home's purchase price and capital improvements helps you accurately calculate your gain and this exclusion when you eventually sell.
Where you'll run into it
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