If you're selling your home, there are a few things you need to know about federal taxes.
If you make a profit on the sale of your home, you may need to report the profit as a capital gain when you file your taxes. However, if you owned and lived in the home as your main home for at least two out of the past five years, you may be able to exclude up to $250,000 of the gain ($500,000 for married couples filing jointly). This excluded gain is also not subject to the new Net Investment Income Tax, which is effective in 2013. If you are eligible to exclude the gain, you don’t need to report the sale on your tax return unless you receive a Form 1099-S, Proceeds from Real Estate Transactions.
Here are some other points to remember:
Publication 523 provides more information about selling your home and is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). This publication includes worksheets to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale and the gain that you can exclude.
Topic 701 - Sale of Your Home - If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income.