As many people know, if you sell your home you may be able to exclude from taxable income up to $250,000 in gains for an individual or up to $500,000 for a married couple.
There has been a change in the rules about the usage of the home that could affect some taxpayers who have used the home at some point as a rental property or vacation property, second home, etc. This change does not apply to anything that happened before January 1, 2009. However, starting with that date, if the property is not used as your main home for some period of time, then the gain is allocated between what they call qualified and non-qualified use. The gain for the qualified-use period can be excluded from taxable income, but the gain from the non-qualified-use period cannot. You would have to pay tax on that part of the gain. Again, this only applies to you if the home was used as other than your main home during any time starting with January 1, 2009.
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