When a taxpayer sells their home, they may not have to pay taxes on the money they gain. If the gain on the sale of a home is not taxable, it may not need to be reported to the IRS.

There are several factors to consider to determine eligibility for an exclusion. One factor is the length of time someone has lived in their home. If someone has lived in their home and used it as their main residence for 2 of the previous 5 years, they may be able to exclude some or all of the gain from the sale.

The most gain that can be excluded from tax is $250,000 for single filers and $500,000 for joint filers. The Net Investment Income Tax does not apply to the excluded gain.

The sale of a home must be reported if the all or part of the exclusion wasn’t claimed. If a Form 1099-S, Proceeds From Real Estate Transactions is issued, the sale of the home must be reported to the IRS. Please see Questions and Answers on the Net Investment Tax for more information.

Exclusion Frequency Limit. Generally, you may exclude the gain from the sale of your main home only once every two years. Some exceptions may apply to this rule.

Only a Main Home Qualifies. If you own more than one home, you may only exclude the gain on the sale of your main home. Your main home usually is the home that you live in most of the time.

First-time Homebuyer Credit. If you claimed the first-time homebuyer credit when you bought the home, special rules apply to the sale. For more on those rules, see Publication 523.

Home Sold at a Loss. If you sell your main home at a loss, you can’t deduct the loss on your tax return.

There are exceptions to the ownership, use and other rules. For more information about these exceptions, click here.