This chapter explains the tax rules that apply when you sell your main home. In most cases, your main home is the one in which you live most of the time.

If you sold your main home in 2012, you may be able to exclude from income any gain up to a limit of $250,000 ($500,000 on a joint return in most cases). See Excluding the Gain, later. Generally, if you can exclude all the gain, you do not need to report the sale on your tax return.

If you have gain that cannot be excluded, it is taxable. Report it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040). You may also have to complete Form 4797, Sales of Business Property. See Reporting the Sale, later.

If you have a loss on the sale, you generally cannot deduct it on your return. However, you may need to report it. See Reporting the Sale, later.

The following are main topics in this chapter.

• Figuring gain or loss.
• Basis.
• Excluding the gain.
• Ownership and use tests.
• Reporting the sale.

Other topics include the following.

• Business use or rental of home.
• Recapturing a federal mortgage subsidy.

This section explains the term "main home." Usually, the home you live in most of the time is your main home and can be a:

• House,
• Houseboat,
• Mobile home,
• Cooperative apartment, or
• Condominium.

To exclude gain under the rules of this chapter, you in most cases must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale.

If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. However, if you sell vacant land used as part of your main home and that is adjacent to it, you may be able to exclude the gain from the sale under certain circumstances. See Vacant land under Main Home in Publication 523 for more information.

You buy a piece of land and move your main home to it. Then you sell the land on which your main home was located. This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land.

If you have more than one home, you can exclude gain only from the sale of your main home. You must include in income gain from the sale of any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time during the year.

You own two homes, one in New York and one in Florida. From 2008 through 2012, you live in the New York home for 7 months and in the Florida residence for 5 months of each year. In the absence of facts and circumstances indicating otherwise, the New York home is your main home. You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2012.

You own a house, but you live in another house that you rent. The rented house is your main home.

You own two homes, one in Virginia and one in New Hampshire. In 2008 and 2009, you lived in the Virginia home. In 2010 and 2011, you lived in the New Hampshire home. In 2012, you lived again in the Virginia home. Your main home in 2008, 2009, and 2012 is the Virginia home. Your main home in 2010 and 2011 is the New Hampshire home. You would be eligible to exclude gain from the sale of either home (but not both) in 2012.

If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. For details, see Business Use or Rental of Home, later.