In this topic your will become familiar with the rules that apply when you sell your main home. Your main home is the home lived in most of the time. You will learn the amount that you can exclude from income of the gain from the sale of your home. In addition, you will learn what to do when the sale cannot be excluded from income, in which case it becomes fully taxable. You will also learn what to do with a non-deductible loss of the sale of your home. 

Most forms are in Adobe Acrobat PDF format. You will need Adobe Reader to view and print these forms. If you do not already have Adobe Reader installed on your computer, you may download the software for free.

Use IRS Publication 523 and Form 1040 Instructions to complete this topic.

Prepare  Form 1040 and Schedule D.

    Karen (Age 24), a single person, bought her home February 23, 2000. She lived in the home until May 31, 2009, when she moved out of the house and put it up for rent. Karen rented out her home until May 31, 2010. That's when she moved back into the house and lived there until she sold it on January 10, 2011. Karen wants to exclude all of the gain from the sale of her home.