Capital Gains tax

Forum|Forum|3 years ago
September 28, 2022
2 replies
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I file my parent's taxes for them each year. They sold their home of 30 years this year and moved into a development that they pay rent on. They are retired and walked away with $80k from the sale of their house. Will they have to pay capital gains on the $80k?

xmasbaby0

Employee

SALE OF HOUSE

If your gain was more than $250,000 filing Single, or more than $500,000 filing Married Filing Jointly the sale must be reported on your tax return. Whether you re-invested the gain in to another house is irrelevant. If you have a Form 1099-S go to Federal>Wages and Income>Less Common Income>Sale of Home (gain or loss)

If you owned and lived in the home as your primary residence for at least 2 of the last 5 years on the date of the sale, you do not have to report the home sale if the gain is less than $250K filing Single, or less than $500K filing Married Filing Jointly (and you both owned and lived in the home for at least 2 years).

If you are using online TT, you need Premier or Self-Employed software to report the 1099-S

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

DoninGA

Employee

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

If they had a gain greater then the exclusion amounts then they would have to report the sale. Also, if they received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported.