Glossary · Property & Estate
Section 121 Exclusion
Section 121 lets a US taxpayer exclude up to $250,000 of gain ($500,000 for a married couple) on the sale of a main home. It applies to a foreign home but is capped — unlike UK Private Residence Relief, which can be unlimited.
Main Home Sale Exclusion
In more detail
The Section 121 exclusion shelters gain on the sale of a main residence if you owned and used it as your main home for at least two of the five years before sale. It applies to a US citizen UK home, but the cap ($250,000 single / $500,000 married) means a large gain the UK exempts fully under Private Residence Relief can still be partly US-taxable — and if no UK tax was due, there may be no foreign tax credit to offset it.
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