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Both spouses sold homes when they married to purchase marital home. How do profit on one and loss on other impact house basis

Forum|Forum|7 years ago
June 1, 2019
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I am trying to find the impact on cost basis of new home when both spouses sold their individual homes in 1993 when they married. We have now sold the new home bought in 1993, and need to figure how a profit on one home sold in 1993 and loss on the other impact the cost basis of joint home sold in 2018.

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Best answer by Coleen3

Prior to 1997, you could elect to postpone the gain on your sale of home if you upgraded a more expensive home. If you still have your physical form, you can check to see if you chose to do so. You may have elected not to. You can see a blank copy of the form below. Part IV would have given you the adjusted basis of the new home you bought, had you elected to postpone the gain.

Per Pub 17:

The records you should keep include: • Proof of the home's purchase price and purchase expenses; • Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis; • Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain; • Any Form 982 you filed to report any discharge of qualified principal residence indebtedness; • Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997; and • Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations.

https://www.irs.gov/pub/irs-prior/f2119--1991.pdf

The sale of a personal home at a loss is not deductible and it would not affect the basis of the new home.

You may qualify for the exclusion for your 2018 sale.

If you meet the qualifications to use the exclusion, any gain over that amount is a capital gain. The exclusions are $250,000 for single, and $500,000 for married filing jointly. See the rules below.

Does Your Home Sale Qualify for Maximum Exclusion

The tax code recognizes the importance of home ownership by providing certain tax breaks when you sell your home. To qualify for these breaks, your home must meet the Eligibility Test , which is explained later.

How your sale qualifies. Your sale qualifies for exclusion of $250,000 gain ($500,000 if married filing jointly) if all of the following requirements are met.

You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale.
You didn’t acquire the home through a like-kind exchange (also known as a 1031 exchange), during the past 5 years.
You didn’t claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude.

C

Coleen3Answer

Employee

Prior to 1997, you could elect to postpone the gain on your sale of home if you upgraded a more expensive home. If you still have your physical form, you can check to see if you chose to do so. You may have elected not to. You can see a blank copy of the form below. Part IV would have given you the adjusted basis of the new home you bought, had you elected to postpone the gain.

Per Pub 17:

The records you should keep include: • Proof of the home's purchase price and purchase expenses; • Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis; • Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain; • Any Form 982 you filed to report any discharge of qualified principal residence indebtedness; • Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997; and • Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations.

https://www.irs.gov/pub/irs-prior/f2119--1991.pdf

The sale of a personal home at a loss is not deductible and it would not affect the basis of the new home.

You may qualify for the exclusion for your 2018 sale.

If you meet the qualifications to use the exclusion, any gain over that amount is a capital gain. The exclusions are $250,000 for single, and $500,000 for married filing jointly. See the rules below.

Does Your Home Sale Qualify for Maximum Exclusion

The tax code recognizes the importance of home ownership by providing certain tax breaks when you sell your home. To qualify for these breaks, your home must meet the Eligibility Test , which is explained later.

How your sale qualifies. Your sale qualifies for exclusion of $250,000 gain ($500,000 if married filing jointly) if all of the following requirements are met.

You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale.
You didn’t acquire the home through a like-kind exchange (also known as a 1031 exchange), during the past 5 years.
You didn’t claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude.