Question

What are the reporting requirement of selling a house

Forum|Forum|5 years ago
March 8, 2021
2 replies
0 views

We sold my house in 2020. The house was our primary residence for 16 years. I would like to know how I (if required) report the sell and the capital gains on the sell. We purchased another house using a small part of the capital gains. I have a record of all the improvements to the house I sold. Subtracting the cost of the improvements and the purchase price of the new house from the net of the home sell is less than $500k. What are the tax reporting requirements of the capital gains?

I

Irene2805

If you qualify for the home sale exclusion, do not include the sale on your tax return (unless the sale was reported on a form 1099-S).

According to IRS Pub. 523 - Selling Your Home:

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.

O

Opus 17

Employee

First, your purchase doesn't matter. The old rule that you could defer your gain by purchasing a new home was eliminated in 1997.

If you sell your personal home, where you lived at least 2 of the last 5 years, and owned at least 2 years, you can exclude the first $250,000 of gain from capital gains; $500,000 if married filing jointly (and assuming both spouses meet both tests and neither spouse has used the same exclusion on a different property in the previous 2 years.). However, you will still have to pay depreciation recapture tax if the home was ever used for business and depreciation was or could have been claimed (home office, home day care, rental, etc.)

You must report your sale and pay any tax due if your gain is more than your exclusion limit, or you have depreciation to recapture, or if you received a 1099-S at the closing even if your gain is not taxable.

If your gain is less than your limit, and you did not receive a 1099-S, and you do not have depreciation to recapture, you don't even have to bother reporting.

If you enter the sale in Turbotax (there is a special section for "your home" that is separate from other assets), Turbotax will determine this for you and if you qualify, will ask you "you don't have to report this sale. Do you want to report it anyway?"

See this for more,

https://www.irs.gov/pub/irs-pdf/p523.pdf