Looking to Sell Your Home? Grab This Big Tax Break if You Can.

Herrick Partner and Chair of the Tax Department, Louis Tuchman, was quoted in The New York Times "Ask Real Estate" column discussing how to establish a Manhattan co-op as a principal residence to benefit from the capital gains exclusion. 

The column notes that "the I.R.S. allows single filers who sell a property that is their primary residence to exclude from their income up to $250,000 from the amount that the property appreciated. The property has to have been your principal residence for at least two years during the five years preceding the sale. Also, if you sold another home in the two years before the sale and used this capital gains exclusion, you're not eligible to use it again." 

To benefit from this provision, the seller will need to collect as much evidence as possible to support the case that the property is the seller's principal residence. The column highlights that the topic is hot right now for another reason: the new pied-a-terre tax on second homes.

In listing the ways to demonstrate residency, Louis noted that "your bank accounts should also use your city address. The stakes are high enough to take as many steps as you can to ensure the result you want."

Read the full column in The New York Times here. Access may require a subscription.