How to avoid capital gains on the sale of your home

On the sale of your home, a single person can avoid capital gains on up to $250,000 of profit and a married couple can avoid capital gains on up to $500,000 of profit.  To qualify, you must have lived in the home two of the last 5 years.  You can use this exemption as many times as you want, but no more often that every two years.

Attorney Tom Olsen: People are still under this theory that you get a one-time sale of your home and avoid capital gains taxes. That's way back in the day, that's the old news. The new news is you can avoid capital gains on the sale of your home as long as you've lived there two of the last five years, and you can use that as many times as you want to during your lifetime but no more often than every two years.

Chrissy: You're right, Tom that people have that misconception from back in the day. It's also -- I'm sure, it also becomes more on the mind of people this time of year because it's tax time. They're thinking about it. Obviously, you can sell your house any time of the year but it's really important information for people to know and be aware. Like you said, in hearing what you say, then they can also check in with their accountants and make sure that things are -- they're complying.

Attorney Tom Olsen: As far as selling your home, the home you have lived in, if you are a single person, you can avoid capital gains up to $250,000 of your profit. If you're a married couple, you can avoid capital gains up to $500,000 of your profit as long as you've lived in that home at least two of the last five tyears. You can use that exemption as many times as you want to during your lifetime but no more often than every two years.

Chrissy: Your homestead.

Attorney Tom Olsen: Exactly.