Question

Sale of primary home

Forum|Forum|3 years ago
April 14, 2023
1 reply
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Why is the profit of the sale of my primary home being taxed as net investment income, form 8960, and included in total income on form 1040?

Not A Product Question

DoninGA

Employee

Did you report the sale in the wrong section of the program? Did you use the home as a rental or in a business at any time prior to the sale? Did you live in and own the home for at least two years in the five year period on the date of sale?

If you sold your primary personal residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).

Gain or Loss = Sales Price minus Sales Expenses minus Adjusted Basis (Purchase Price plus the cost of improvements prior to the sale)

If you had a gain greater then the exclusion amounts then you would have to report the sale. Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported. You will need the online TurboTax Premier or Self-Employed edition to report the sale if you are using the online editions. Make sure that you indicate that you want the sale of the home reported on your tax return.

Click on Federal Taxes (Personal using Home and Business)
Click on Wages and Income (Personal Income using Home and Business)
Click on I'll choose what I work on (if shown)
Scroll down to Less Common Income
On Sale of Home (gain or loss), click the start or update button

Or enter sale of home in the Search box located in the upper right of the program screen. Click on Jump to sale of home

P

ppeskyppAuthor

I have done this several times, but still shows up as taxable income and investment income, which calculates the tax on taxable income and adds the tax from investment income.

DoninGA

Employee

Assuming that you lived in the home for at least two years in the 5 year period on the date of sale, that you at no time used the home as a rental or in a business and that the gain on the sale was less than exclusion amounts, you will need to delete the Home Sale Worksheet.

Using the TurboTax desktop editions, click on Forms. When in Forms mode find the Home Sale Worksheet on the left side of the screen (Home Sale Wks). Click on the worksheet to open and then click on Delete Form at the bottom of the page. Return to the step-by-step interview.

Using the TurboTax online editions, click on Tax Tools on the left side of the online program screen. Click on Tools. Click on Delete a form. Delete the Home Sale Worksheet.

Go back to the Sale of Home section -

Click on Federal Taxes (Personal using Home and Business)
Click on Wages and Income (Personal Income using Home and Business)
Click on I'll choose what I work on (if shown)
Scroll down to Less Common Income
On Sale of Home (gain or loss), click the start or update button

Enter the information for the home. Review the following screenshots and make sure yours are entered in a similar manner. The dates and prices on the screenshots are only for test purposes, yours should be exact.