Does Your Home Qualify for a Partial Exclusion of Gain?: Home Sale Taxes (2025 IRS Guide)

This guide covers “Does Your Home Qualify for a Partial Exclusion of Gain?” within home sale taxes. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 523 (2025), Selling Your Home, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Context for these rules

The tax code recognizes the importance of home ownership by allowing you to exclude gain when you sell your main home. To qualify for the maximum exclusion of gain ($250,000 or $500,000 if married filing jointly), you must meet the Eligibility Test, explained later. To qualify for a partial exclusion of gain, meaning an exclusion of gain less than the full amount, you must meet one of the situations listed in Does Your Home Qualify for a Partial Exclusion of Gain, explained later.

Before considering the Eligibility Test or whether your home qualifies for a partial exclusion, you should consider some preliminary items.

Does Your Home Qualify for a Partial Exclusion of Gain?

If you don't meet the Eligibility Test, you may still qualify for a partial exclusion of gain. You can meet the requirements for a partial exclusion if the main reason for your home sale was a change in workplace location, a health issue, or an unforeseeable event.

Work-Related Move

You meet the requirements for a partial exclusion if any of the following events occurred during your time of ownership and residence in the home.

• You took or were transferred to a new job in a work location at least 50 miles farther from the home than your old work location. For example, your old work location was 15 miles from the home and your new work location is 65 miles from the home.

• You had no previous work location and you began a new job at least 50 miles from the home.

• Either of the above is true of your spouse, a co-owner of the home, or anyone else for whom the home was their residence.

Health-Related Move

You meet the requirements for a partial exclusion if any of the following health-related events occurred during your time of ownership and residence in the home.

• You moved to obtain, provide, or facilitate diagnosis, cure, mitigation, or treatment of disease, illness, or injury for yourself or a family member.

• You moved to obtain or provide medical or personal care for a family member suffering from a disease, illness, or injury. A family member includes your:

  1. Parent, grandparent, stepmother, stepfather;

  2. Child (including adopted child, eligible foster child, and stepchild), grandchild;

  3. Brother, sister, stepsibling;

  4. Mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law; and

  5. Uncle, aunt, nephew, or niece.

• A doctor recommended a change in residence for you because you were experiencing a health problem.

• The above is true of your spouse, a co-owner of the home, or anyone else for whom the home was their residence.

Unforeseeable Events

You meet the standard requirements if any of the following events occurred during the time you owned and lived in the home you sold.

• Your home was destroyed or condemned.

• Your home suffered a casualty loss because of a natural or man-made disaster or an act of terrorism. (It doesn’t matter whether the loss is deductible on your tax return.)

• You, your spouse, a co-owner of the home, or anyone else for whom the home was their residence:

  1. Died;

  2. Became divorced or legally separated or were issued a separate decree to pay maintenance (support) to the other spouse;

  3. Gave birth to two or more children from the same pregnancy;

  4. Became eligible for unemployment compensation;

  5. Became unable, because of a change in employment status, to pay basic living expenses for the household (including expenses for food, clothing, housing, medication, transportation, taxes, court-ordered payments, and expenses reasonably necessary for making an income); and

  6. An event is determined to be an unforeseeable event in IRS published guidance.

Other Facts and Circumstances

Even if your situation doesn’t match any of the standard requirements described above, you still may qualify for an exception. You may qualify if you can demonstrate the primary reason for sale, based on facts and circumstances, is work related, health related, or unforeseeable. Important factors are:

• The situation causing the sale arose during the time you owned and used your property as your residence;

• You sold your home not long after the situation arose;

• You couldn’t have reasonably anticipated the situation when you bought the home;

• You began to experience significant financial difficulty maintaining the home; and

• The home became significantly less suitable as a main home for you and your family for a specific reason.

Worksheet 1. Find Your Exclusion Limit

Use this worksheet only if no automatic disqualifications apply, and take all exceptions into account.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

• Publication 523 (2025), Selling Your Home: Does Your Home Sale Qualify for the Exclusion of Gain? — Does Your Home Qualify for a Partial Exclusion of Gain? — Internal Revenue Service; 2025 edition.

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.