Question

Since it will probably be an installment house sale, does whatever exemption amount is not used in the sale year, roll into the next year?

Forum|Forum|4 years ago
November 9, 2021
3 replies
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Critter-3

I think you do not understand how installment sale form 6252 works ... so are you asking about selling a personal residence and using the exclusion (not exemption) ? If so are you holding the mortgage ? And is the entire profit on the sale going to be excluded ?

Hal_Al

Employee

Q. Does whatever exemption amount is not used in the sale year, roll into the next year?

A. Simple answer: no. If you sell the house this year and qualify for the home sale exemption, you claim it all on this year's return. Effectively, you just don't report the sale (unless you have to deal with a form 1099-S). You do not report the capital gain portion/principle payments as an installment sale, in future years. You do report the interest payments.

A

airstream3454cuAuthor

Thanks! I know I'm asking ahead of time, but I want to make sure I understand al the rules. Of course, this is assuming that the home sale rules don't change..

Critter-3

As of this time there are no known changes coming down the pike to that section of the tax law.

A

Anonymous_

Employee

@airstream3454cu wrote:
Since it will probably be an installment house sale, does whatever exemption amount is not used in the sale year, roll into the next year?

You would use the entire exemption (home sale exclusion) amount in the year of the sale.

If your gain exceeds the exclusion amount ($250,000 or $500,000), and you are receiving payments after the tax year in which the sale occurs, then you can use the installment method (or you can opt out of it).