What is the exclusion limit for capital gains on the sale of a primary residence for single filers?

The exclusion limit for capital gains on the sale of a primary residence for single filers is $250,000. This provision falls under the Internal Revenue Code Section 121, which allows individuals to exclude a certain amount of capital gains from taxable income when selling their primary residence.

To qualify for the exclusion, the homeowner must have owned and used the property as their main home for at least two of the five years preceding the sale. This benefit is designed to provide relief to homeowners, allowing them to keep a significant portion of the profit from the sale of their home without having to pay capital gains tax.

For married couples filing jointly, the exclusion limit is higher, at $500,000, reflecting their ability to combine individual exclusions. However, for single filers, the limit remains firmly set at $250,000, which serves as an essential tool in tax planning for individuals looking to sell their homes. Understanding this exclusion is crucial for effective tax management, especially for anyone considering the sale of their residence.