Selling Your Home

Losses from home sales cannot be deducted. Business or rental property is subject to different rules. You can take extra deductions by staying in the home and converting part of it for business or rental use. When you sell your home, you can claim a business loss if the property declines in value below its current tax basis, but only on the portion of property that is actually used for business or rental purposes.

Married couples can exclude up to $500,000 of gain when they sell their home ($250,000 for singles). The home must have been the principal residence for at least two of the last five years. Homeowners can receive a portion of the exclusion based on how long they lived in the home, as long as the sale is due to a change in place of employment or health, or unforeseen circumstances. The exclusion can be used once every two years and at any age.