All have taken notice to the for-sale signs everywhere. It seems the real estate market is on a spiral only going up. While the higher homes prices and bidding wars are not ideal for the buyer’s market, it has great advantages for the sellers.

Are you or do you know of anyone frightened by the large amount of profit turned on the sale of a home? Well you’re in luck! Talking tax, there is a fantastic residential gain exclusion for singles and married couples. It is quite generous at a $250,000 excluded gain for singles and $500,000 excluded for married couples.

There are a few conditions that must be met that include an ownership, use and frequency test. The ownership and use tests require that the individual(s) own and use the home as a principal residence for at least two out of five years prior to the sale. The frequency test is a limitation that allows the annual exclusion to be used only once every two years.

For example, Jimmy bought a home in 2005 for $200,000 and then married Julie in 2008, whom moved in with Jimmy. In 2016, they sold their home for $700,000. They can exclude the entire $500,000 gain on a joint return because all tests are met.