What are the capital gains taxes on sale of your primary home?

Attorney Tom Olsen: Robert, you're on 969 again. Go ahead.

Robert: Thank you so very much. I have a question about my primary residence. We purchased it about five years ago, a brand new construction for about 270. The houses are going, in my area, now between 400 and 500. We were considering selling it. Taking the profit and maybe renting for a while, and then coming back out to purchase later when the prices drop. What are your thoughts on that?

Attorney Tom Olsen: It sounds like you're a married man, Robert.

Robert: Yes, I am.

Attorney Tom Olsen: Let's start from the beginning. The internal revenue code says that a married couple, you can sell your home, the home you live in, and avoid capital gains on up to $500,000 of profit, as long as you've lived there two of the last five years. Robert, you and your wife would qualify for that exemption. The fact is, you could sell your home and pay absolutely no capital gains taxes. By the way, that rule for a single person is $250,000 profit you can avoid capital gains taxes. This is not a once-in-a-lifetime deal that you can do this as many times as you want during your lifetime, but no more often than every two years. From a tax perspective, Robert, it's all good news for you.