There are four areas that compose most of the tax concerns for home owners. Note: We're just touching on the subject here-consult with a tax professional for specific advice on your tax situation.

1. When you've owned and lived in the property the past 2 out of 5 years - Provided your home qualifies (and most do), you should be able to exclude from capital gain up to $250,000 per person, up to $500,000 per married couple filing jointly. This is probably the biggest boon to tax payers currently in the tax code.

2. When you've lived and owned the property less than 2 years - You still may be able to claim a part of the exclusion. There are three exceptions to the rule. They are when you are forced to move because of health concerns, employment reasons and unforeseen events. Obviously, these are open to some interpretation. The amount you may be able exclude is determined by a formula based on the amount of time you actually lived in the property. If you've lived in the property for shorter than the qualifying time and think (or hope!) your case might be an exception, be sure to check with a good tax attorney.

3. When your gain in the property exceeds the amount of your exclusion - When Congress enacted the exclusion back in the 1997 Taxpayer Relief Act, most of the country was in the depths of a real estate recession and an exclusion of up to $500,000 for married couples filing jointly seemed to cover virtually all lower and middle class families. Since then, however, home prices have skyrocketed and as a result, some owner's capital gain exceeds the excluded amount. If that's the case, assuming you've lived in the property a year or more, you'll pay long-term capitals gains (currently 15 percent) on the balance.

4. When you've lived in the property for less than two years and you aren't an exception to the two-year rule, in other words you don't qualify for any of the exclusion. If you've lived there for between one and two years, you'll pay long-term capital gains tax as noted above. If you've lived in the property for less than two years, you'll owe short-term capital gains tax, which means you'll probably end up paying at the ordinary income tax rate. However, you may be able to write off your short-term gain here against loss elsewhere. And there may be other advantages of having a short-term capital gain. Again, this is an area for a good accountant.

Keep in mind that there are additional concerns. For example, if you had a home office and took depreciation, you may have to recapture that depreciation.

TIP

Although it's unlikely in today's hot market in most areas of the country, there's always a chance you could have a capital loss on the sale of your home. Unfortunately, you will not be able to write that loss off against other income. The sad fact is that capital loss on your personal residence is not deductible.