Tax Free / Tax Deferred

IRS Code 1021 allows for a homeowner to sell their homestead property and receive their proceeds TAX FREE with certain residency and other restrictions. (IRS Code 1031 allows for a TAX DEFFERED sale of non-homestead property.)

Tax Free - IRC (Internal Revenue Code) 121:
Congress enacted the Internal Revenue Code 121 principal residence sale tax exemption up to $250,000 for a qualified single home seller and up to $500,000 for a qualified married couple who file a joint tax return in the year of the home sale.  To qualify, the home seller(s) must have owned and occupied their principal residence an "aggregate" two of the last five years before its sale.  For a married couple, only one spouse need hold title, but to qualify for the $500,000 break both spouses must meet the two-year occupancy test.  If two individuals, not married to each other, own a home together, they must each meet the two out of last five years ownership and occupancy tests.

Tax Deferred - IRC (Internal Revenue Code) 1031:
This code is a bit more complex.  I'll let my friend Jack Shea at www.1031TaxFreeSale.com explain.