Home Table of Contents

006.05.307-26-51-305. INCOME FROM SALE OF HOME

AR ADC 006.05.307-26-51-305Arkansas Administrative Code

West's Arkansas Administrative Code
Title 006. Department of Finance and Administration
Division 05. Division of Revenues
Rule 307. Comprehensive Individual Income Tax Regulations (Refs & Annos)
Ark. Admin. Code 006.05.307-26-51-305
006.05.307-26-51-305. INCOME FROM SALE OF HOME
1.26-51-305(a) One Time Exclusion of Gain from Gross Income
A taxpayer may make a one time (i.e., once-in-a-lifetime) election to exclude from his gross income the gain realized from the sale or exchange of a home if the following conditions are met:
1 The taxpayer has reached the age of fifty-five (55) before the date of the sale or exchange; and
2 During the five (5) year period ending on the date of the sale or exchange, the home was owned and used by the taxpayer as his principal residence for a period of (or periods aggregating) three (3) years or more.
1.26-51-305(b) One Time Exclusion of Gain from Gross Income -- Amount Excludable
The maximum amount of gain excludable from gross income under this section is one hundred twenty-five thousand dollars ($125,000.00). In the case of a separate return filed by a married taxpayer, the maximum amount allowable shall be sixty-two thousand five hundred dollars ($62,500.00) for such taxpayer.
The exclusion from gross income provided by this section can only be taken once by a taxpayer after reaching the age of fifty-five (55). After this election has been properly taken by a taxpayer, it shall not be available to the taxpayer again. However, refer to 1.26-51-305(c) regarding revocation of the election.
1.26-51-305(c) One Time Exclusion of Gain from Gross Income -- Example
An election to exclude from gross income the gain realized from the sale or exchange of a home may be made or revoked at any time before the period expires for filing a claim for credit or a refund of income tax paid for the tax year in which the sale or exchange occurred. If the taxpayer making the election or revocation is married, the taxpayer's spouse must join in the election or revocation.
For example, a taxpayer well above the age of fifty-five (55) sold his long-time principal place of residence in 1994. The taxpayer realized fifty-five thousand dollars ($55,000.00) in gain from the sale. In 1995, the taxpayer made his once-in-a-lifetime election to exclude the $55,000.00 of gain from his gross income. The taxpayer now wishes to revoke this election, as he anticipates realizing a larger gain on the pending sale of his current residence. Pursuant to ACA 26-18-306(i)(1), the taxpayer must file his revocation with the Department within three (3) years from the date his 1994 Arkansas income tax return was filed or two (2) years from the time his 1994 Arkansas income tax due was paid, whichever period expires later.
1.26-51-305(d)(1) One Time Exclusion of Gain from Gross Income -- Husband & Wife
With respect to excluding from gross income the gain realized from the sale or exchange of a home, both a husband and wife shall be treated as satisfying the age, holding and use requirements of 1.26-51-305(a) if all of the following requirements are met:
a) The home is held by the husband and wife as either:
i. joint tenants; or
ii. tenants by the entirety;
b) The husband and wife file an Arkansas joint return or “separate on same” return for the tax year in which the home was sold or exchanged; and
c) At least one (1) of the spouses satisfies the age, holding and use requirements of 1.26-51-305(a) with respect to the home.
Current with amendments received through May 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 006.05.307-26-51-305, AR ADC 006.05.307-26-51-305
End of Document