If you're fortunate enough to make more than $250,000 on a home you bought and lived in, you might be liable for some tax when you sell it. But many people believe that it's actually a small price to pay.
However, the truth is that it's rare for a person to actually realize a quarter of a million dollars in true profit from a home sale; and couples are authorized double that amount, $500,000. Even if you are liable for payment on long-term capital gain of more than half a million dollars, the 20 percent top rate on the difference is probably worth it.
Defining the Capital Gains Tax
American citizens are subject to income tax on money they earn, both from employment and investment. Profit on investment is classified as a short (one year or…