You may not have to pay capital-gains taxes on your home-sale profits, even if you've lived in the house for just a few months. By Kimberly Lankford, Contributing Editor June 21, 2007 I just started a new job that is two hours away from my house, and I'm not going to be able to keep up the long commute. If I sell my home, will I need to pay capital-gains taxes? I will have owned it for a year in August. You may not have to pay capital-gains taxes on your home-sale profits, even though you've lived there for just a few months. After someone owns and lives in their home for two of the past five years, he or she won't owe taxes on up to $250,000 in home-sale profits if single, or $500,000 in profits if married filing jointly. But you still may qualify for a partial exclusion even though you owned the home for less than two years, depending on the reason you moved. If your new job is at least 50 miles farther away from your old home than your old job was -- which it sounds like is your situation -- then you can prorate the exclusion based on the number of months you owned and lived in the home. If you sell the home after 10 months, for example, then you can take 41.7% of the exclusion (10 out of 24 months). That means you can exclude $104,250 in home-sale profits from taxes if you're single, or $208,500 if you're married filing jointly. Advertisement If your home-sale profits are more than that, you'll have to pay capital-gains taxes on any money you make beyond that exclusion. Because you owned the home for one year or less, then you'll have to pay short-term capital-gains taxes on the profits, which are assessed at your income-tax rate (up to 35%, depending on your income). If you had owned and lived in the house for more than a year, you'd be taxed on the profits at your long-term capital-gains rate of 15% or less. You may be able to lower the tax bill by adding major home improvements and closing costs to your basis, which will lower the taxable profit. You also can qualify for a partial exclusion if you move within less than two years because of your health or the health of relatives in your care, or if you are affected by other unforeseen circumstances approved by the IRS, such as death, divorce, multiple births from the same pregnancy, becoming eligible for unemployment compensation, damage to the home from a disaster or act of war or terrorism. For a full list, see IRS Publication 523 Selling Your Home. Got a question? Ask Kim at firstname.lastname@example.org.