Category: Real Estate

Real Estate

Selling your house? Prorated gain exclusion

Sep 27, 2021 by Ed Babitzke 0 Comments

Here’s good news. IRS regulations allow you to claim a prorated (reduced) gain exclusion—a percentage of the $250,000 or $500,000 exclusion in select circumstances.

The prorated gain exclusion equals the full $250,000 or $500,000 figure (whichever would otherwise apply) multiplied by a fraction.

The numerator is the shorter of:

  • the aggregate period of time you owned and used the property as your principal residence during the five-year period ending on the sale date, or

  • the period between the last sale for which you claimed an exclusion and the sale date for the home currently being sold.

    • Selling your primary residence? IRS Publication 523
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