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In 2003, the IRS issued new rules interpreting the $250,000 principle residence sale tax exemption (up to $500,000 for a married couple filing jointly). To qualify, the seller(S) must have owned and occupied their principle residences an “aggregate” of two of the five years before the home sale. Occupancy doesn’t have to be continuous. The residence doesn’t have to be the seller’s principle residence at the time of the sale. This tax exemption can be used over and over again without limit, but it can’t be used more often that every 24 months. Only one spouse‘s name needs to be on the title as long as both spouses meet the occupancy requirements. If title is held in a living trust, the full tax exemption is still available.

You must be able to prove that it is your principle residence to get the exemption. Proof includes automobile registration, local bank accounts, voter registration, employment, and income tax returns. A partial $250,000 exemption is available for home sales with less than 24 months of ownership and occupancy if the reason for the sale is a change of employment location, health reasons for illness treatment or to care for a family member, and unforeseen circumstances.

Read the complete article on our blog HERE

Vermont Real Estate & Home Services