My wife and I sold a home used as rental property. We received a 1099-S and filing MFS; can I pay all of the capital gains myself? How does she handle that on her return?

Forum|Forum|2 years ago
July 11, 2023
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Carl11_2

Employee

Is there some reason you're not filing a joint return? Makes life a whole lot simpler if you do. Additionally, when a married couple files separate, you both automatically lose out on credits and deductions you would otherwise qualify for by filing joint.

When filing separate, it also matters big time, if you live in a community property state.

How have you been filing and reporting the rental income in the past? That could matter too.

nedhaynesAuthor

Yes, there is a reason, but if it becomes too complicated we can file jointly. If we do file separate can I pay all the taxes? How would she handle it on her return? Thanks for your help.

Carl11_2

Employee

How you handle it on separate returns, depends on two factors.

1) Do you live in a community property state that taxes personal income?

2) How have you filed and reported the rental income/expenses on 2921 and earlier tax returns? Joint? Separate?

As far as I am aware of the community property states are Arizona, California, Idaho, Louisiana, Nevada,New Mexico,Texas, Washington and Wisconsin

Mike9241

there is little written specifically about who pays capital gains taxes on the sale of joint ownership property (non-community property state). this is what IRS PUB 550 says Joint accounts. If two or more persons hold property (such as a savings account, bond, or stock) as joint tenants, tenants by the entirety, or tenants in common, each person's share of any interest or dividends from the property is determined by local law.