Know the Tax Laws When Selling Your House

Real estate tax laws changed eight years ago, but unless you've tried to sell your home since then, you might not be aware of this.

A married couple who sells their primary residence now can make a profit of up to $500,000 without having to pay income tax on the gain--singles can shelter up to $250,000 from taxes.

Gains beyond these limits will be taxed at the rate for long-term capital gains, which maxes out at 15%, but could be as low as 5% if your taxable income is low enough.

And you don't have to reinvest those gains in another house to sidestep taxes. You can put the gain back into a new home, invest it, or spend it as you like.

Be aware that to exclude your home-sale gain from taxation, you must have owned and lived in the house as your primary residence for two of the past five years. However, those two years don't have to be 24 consecutive months.

For more details about exceptions, variations, and conditions of this section of the tax code visit IRS Publication 523: Selling Your Home.