I’m trying to understand capital gains tax. If I make 250k profit on my house, I don’t have to pay any capital gains tax bc up to 250k is excluded? I get to keep all of it?

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If you lived in the house for 2 out of the last 5 years.

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*at least 2 years (does not need to be consecutive) within the past 5 years

250k filing single and 500k filing married

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You can only take advantage of the full value of the homestead exemption every 2+ years. But even with that, many people don’t understand the value they are giving up by capitalizing on it as much as possible and will wait too long and still pay gains on appreciation.

It’s a nice exemption, but not unlimited.

Some people hold onto their house for 10 or 15 years, and then have a $700k gain that can’t be fully offset by the homestead exemption.

Also, because you need to live in the house for 2 full years, you can’t really take full advantage every year if you happen to buy a house that has a huge gain. So it’s a pretty awesome exclusion when you can use it, but you can’t use it often and there’s still an upper limit to it.

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