The Federal Tax Code allows married taxpayers to exclude from capital gains taxes up to $500,000 in profits from selling a home (singles can exclude $250,000). In order to qualify for this exemption, you must prove that that the home has been your principal residence for at least two out of the last five years. The establishment of the home as a principal residence depends on the facts of each homeowner's circumstance. Here are two cases to consider.

Homeowner A has lived at 25 Pine Drive for 12 years. Although he stays at his vacation cottage in another town for up to three months out of each year (sometimes more), 25 Pine Drive is his principal residence, where he lives most of the time. When he sells the home, Homeowner A (filing as a single individual) can keep up to $250,000 in tax-free profit.

Homeowner B buys 108 Maple Street, intending to live there. He rents it out while waiting to sell his current home, where he has lived for six years. His principal residence sells at the end of two years. Homeowner B moves into his new house, lives there for three months, and then decides to travel. After a six-month trip, he regrets buying 108 Maple Street and sells it. Even though he has owned the house on Maple Street for over two years, it won't qualify as "owner-occupied", because he only lived in it for a few months. Thus Homeowner B is not eligible to claim the tax exemption when he sells the house on Maple Street.

Consult your tax advisor for advice about your particular circumstance.

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Shana Rohde-Lynch
Pacific Union International
1550 Tiburon Blvd Suite U
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Shana Rohde-Lynch has a proven track record that no other agent in Marin County can match. Shana is a licensed realtor with Pacific Union International & Christie's International working with buyers and sellers all over Marin County. Previously. Shana was with Frank Howard Allen Realtors for 23 years. In 2002 Shana was inducted into the "Hall of Fame" achieving the highest honor attainable. Shana was named #1 agent for all of Marin County in 2003 closing 52 transactions. She was the #1 agent in 2004 closing 70 transactions. For 2009 and 2010 she was one of the Top 10 agents. She continues to remain at the top of her field year after year. Shana is the President and Founder of Go2Marin.com, the top real estate website in Marin County. Shana's expertise and extensive experience shines through. With a full support staff she is able to devote more time to her clients, providing them with the utmost in fast, efficient service and follow through. Shana's Innovative Marketing Plan exceeds all of her competition. Whether you are searching for the home of your dreams, or thinking of selling it, Shana can turn your dreams into reality!

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