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If you do not meet the ownership and use tests, you may use a reduced maximum exclusion amount. But only if you sold your home due to health, a change in place of employment, or unforeseen circumstances.
An extra perk? According to Litzner, if you can exclude all the gain from the sale of your home, you do not report it on your federal tax return. If you cannot exclude all the gain, or you choose not to, you must use Schedule D of Form 1040, Capital Gains or Losses, to report the total gain and claim the exclusion you qualify for.
How about for those with more than one home?
"You can exclude the gain only from the sale of your main residence," says Litzner. "You must pay tax on the gain from selling any other home." If you have two homes and live in both of them, your main home is usually the one you live in most often.
For more real estate information, please contact Century 21 American Homes at 1-800-270-6318, or Century 21 American Homes.
Century 21 American Homes is one of the fastest growing real estate brokerages serving Long Island, Queens and Brooklyn. To find out more about an exciting career in real estate contact us at careers@c21amhomes.com.
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