A reminder about the home-sale gain exclusion for those in nursing homes. Taxpayers who have owned and used a home as their principal residence for at least two of the five years leading up to the sale can exclude up to $250,000 ($500,000 if married) of the gain when they sell. However, the rules are more lenient for homeowners who can’t care for themselves and have moved to a nursing home. The length-of-use requirement is lowered to one out of five years preceding the sale. Note the tax implications if you’re considering a short sale of your home… selling the property for less than the outstanding balance on your mortgage loan. One set of rules is for recourse loans, in which the debtor is personally liable for the shortfall on the sale. If the lender ends up forgiving the debt, the waived debt is taxed as income unless the homeowner is insolvent or has filed for bankruptcy. If the debt forgiveness is on the seller’s principal residence and occurred prior to 2018, up to $2 million of forgiven debt is tax-free. This tax break expired at the end of 2017. Results differ on nonrecourse loans, meaning the debtor isn’t personally liable for the deficiency. In this situation, the waived debt is included in the amount realized for calculating gain or loss on the short sale. For primary homes, no loss is allowed and up to $250,000 of gain…$500,000 for joint filers…can be excluded from income.