Income from the sale of your home Personal income types
Sale of your principle residence
We conform to the IRS rules and allow you to exclude, up to a certain amount, the gain you make on the sale of your home. You may take an exclusion if you owned and used the home for at least 2 out of 5 years.
In addition, you may only have one home at a time. It may be any of the following:
- Mobile home
- Cooperative apartment
Ownership and use requirement
During the 5 years before you sell your home, you must have at least:
- 2 years of ownership and
- 2 years of use as a primary residence
Ownership and use can occur at different times.
You do not have to report the sale of your home if all of the following apply:
- Your gain from the sale was less than $250,000
- You have not used the exclusion in the last 2 years
- You owned and occupied the home for at least 2 years
Any gain over $250,000 is taxable.
Married/Registered domestic partner (RDP)
Married/RDP couples can exclude up to $500,000 if all of the following apply:
- Your gain from the sale was less than $500,000
- You filed a joint return for the year of sale or exchange
- Either spouse/RDP meets the 2-out-of-5-year ownership requirement
- Both spouses/RDPs meet the 2-out-of-5-year use requirement
- Neither you nor your spouse/RDP excluded gain from the sale of another home in the last 2 years
Any gain over $500,000 is taxable.
Work out your gain
If you do not qualify for the exclusion or choose not to take the exclusion, you may owe tax on the gain.
Your gain is usually the difference between what you paid for your home and the sale amount. Use Selling Your Home (IRS Publication 523) to:
- Determine if you have a gain or loss on the sale of your home
- Figure how much of any gain is taxable
- Report the transaction correctly on your tax return
How to report
If your gain exceeds your exclusion amount, you have taxable income. File the following forms with your return:
- Federal Capital Gains and Losses, Schedule D (IRS Form 1040 or 1040-SR)
- California Capital Gain or Loss (Schedule D 540) (If there are differences between federal and state taxable amounts)
Visit Instructions for California Schedule D (540) for more information.