Capital Gains | What is the 2 of 5 rule?

Understanding the tax implications of your sale can have a huge impact on your bottom line.

When does capital gains tax not apply? When selling real estate, if you have lived in the property TWO of the last FIVE years - the IRS exempts $250,000 of profit (or gain) for a single person - or - $500,000 if married or filing jointly. This can be a huge game changer in your bottom line. The two years do not necessarily have to be consecutive.

This is a generality. For specific tax information and how the 2 of 5 rule would play out in your specific situation, contact your tax advisor.