Determining Tax Liability for a Home Sale (From MSN Home)

The law makes the first $250,000 of profit on the sale of a home tax-free if you meet a couple of tests. The quarter-million-dollar limit is for single returns; it doubles to $500,000 if you're married and file a joint return with your husband or wife.

You qualify for tax-free profit on your home sale if:

1) You owned and lived in the house for two of the five years leading up to the sale; and

2) You did not sell another house -- and claim tax-free profit on the deal -- in the two years leading up to the time you sold this house.

If you pass those tests and the selling price of the house was below the tax-free limit for your filing status, it is certain that you have no profit to report. So the IRS doesn't want to hear about it.

If you sold a home and do not meet these criteria, things get a little more complicated and you will likely have to pay taxes on the gain - however, there are a number of ways to minimize this obligation and it is worth visiting an accountant for professional advice.

Spring Buying & Selling Strategies (Chicago Tribune)

The spring real estate season is about to get under way, and anybody who expects to take part--as a seller or a buyer--needs an action plan.

http://www.chicagotribune.com/classified/realestate/realestate/chi-0603120440mar12,0,7328588.story?coll=chi-classifiedrealestate-hed