If not entirely used in one sale, the unused portion of the $250,000 exclusion on the sale of a taxpayer's principal residence may be used to reduce the recognized gain on the sale of the taxpayer's next residence.

Question

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The $250,000 exclusion (or $500,000 for married couples filing jointly) on the sale of a taxpayer's principal residence cannot be carried over or applied to the sale of any subsequent residences. It applies only to the sale of a principal residence, and any unused portion of the exclusion cannot be used for future sales.

If Not Entirely Used in One Sale, the Unused Portion