IRS Publication 523 — Selling Your Home

For more information about like -kind exchanges, see Pub. 544.

For additional information about the intersection of sections 121 and 1031, see Revenue Procedure 2005 -14, 2005-7 I.R.B. 528, available at IRS.gov/irb/ 2005-07_IRB#RP-2005-14.

Note, however, that any period after 2008 during which the property isn’t used as a principal residence is, with certain exceptions, considered nonqualified use of that property for which gain allocable to such period may not be excluded, in accordance with section 121(b)(5). This includes property that is separate from the main property and not a part of the living area of the main home that isn’t used as a principal residence for a period after 2008. See section 121(b)(5)(C). See also Revenue Procedure 2005-14 for examples that illustrate how to allocate basis and gain realized in an exchange that is also eligible for section 121 exclusion, as well as details of depreciation recapture. See Form 8824 and its instructions for more details. For additional information, see Property Used Partly for Business or Rental and Business or Rental Use of Home, later.

Eligibility Test › Eligibility Step 6—Final Determination of Eligibility If you meet the ownership, residence, and look -back requirements, taking the exceptions into account, then you meet the Eligibility Test. Your home sale qualifies for the maximum exclusion. Skip to Worksheet 1, later. If you didn’t meet the Eligibility Test, then your home isn’t eligible for the maximum exclusion, but you should continue to Does Your Home Qualify for a Partial Exclusion of Gain.

Does Your Home Sale Qualify for the Exclusion of Gain? › Does Your Home Qualify for a Partial Exclusion of Gain? If you don't meet the Eligibility Test, you may still qualify for a partial exclusion of gain. You can meet the requirements for a partial exclusion if the main reason for your home sale was a change in workplace location, a health issue, or an unforeseeable event.