What is the maximum exclusion a single taxpayer can claim on the gain from the sale of their residence?

A single taxpayer can claim a maximum exclusion of $250,000 on the gain from the sale of their primary residence. This provision is part of the Internal Revenue Code under Section 121, which allows taxpayers to exclude a significant portion of capital gains from taxable income when selling their home, provided they meet certain ownership and use requirements.

To qualify for this exclusion, the taxpayer must have owned and lived in the home as their primary residence for at least two out of the five years preceding the sale. This tax benefit is designed to encourage home ownership and allows sellers to retain more of their profits from the sale of their homes without being subject to federal capital gains taxes.

The exclusions provided under this section do not apply to tax liabilities resulting from depreciation claimed on a home office if it was used as a principal residence, or if the exclusion was previously claimed within a certain time frame. Understanding this exclusion is crucial for homeowners, as it can significantly affect the net proceeds from a home sale.