None, assuming the property was your principal residence during the year. In other words, a property that was owned and occupied by you at any time in the year can be sold on a tax-exempt basis. The property can be a house, an apartment, a cottage, a mobile home, a trailer or a houseboat, and it can be located anywhere in the world.
Things can get a little more complicated if you own more than one residential property or if you decide to rent out your home.
In the first case, you should bear in mind that you can designate only one home as your principal residence each year. The most common scenario is that a taxpayer buys a new residence before the previous one can be sold. For tax purposes the taxpayer’s former home is considered the principal residence in the year it is sold and does not give rise to a taxable capital gain.
If you move out and choose to rent out your home, it can remain your principal residence for up to four years (and longer under specific circumstances) as long as you make an election to that effect in the year you start renting it out, you continue live in
If you are contemplating selling more than one residential property, thinking about renting out your home or re-occupying a rental property, ask your accountant or tax advisor to help you navigate your options.
This post was donated by the inimitable Mindy Abramowitz, YMbD’s very cool accountant. If you have a question about this post, or another accounting question, just ask! We’ll respond in next Wednesday’s “ask an accountant” post.