Tax Breaks & the Benefits of Buying, Part 2

Tax Free Profits from the Sale of your Home

That’s right. If you are married and file a joint tax return with your spouse, up to $500,000 of profit from the sale of your home is tax free. If you are single, than up to $250,000 of profit from the sale of your home is tax free.

In order to exclude profits from the sale of your home, the property must have served as your primary residence for two out of the past five years. Those two years do not have to be consecutive.

This ability to retain the profits from the sale of your own home is a huge advantage over renting. Unlike rent payments, you can think of a mortgage payment as a monthly investment that will pay you dividends in the future.

Did you miss part one of this series? Click here for more information about mortgage interest deductions.