Selling a house after two years can potentially qualify homeowners for significant capital gains tax exclusions. Homeowners should understand the two-out-of-five-years rule, which enables exclusions of up to $250,000 for single filers and $500,000 for married couples. To qualify, they must meet both ownership and residency requirements. However, market conditions and related selling costs may diminish the financial benefits of a quick sale. Thoroughly evaluating these factors is essential before proceeding with listing a home.
The two-out-of-five-years rule allows many sellers to exclude up to $250,000 in capital gains (if single) or up to $500,000 (if married and filing jointly).
To qualify for this tax exclusion, you must have owned your home for at least two years and lived in it as your primary residence for at least two of the past five years.
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