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Investment Planning |
Sale of your home
If you sell your home this year, next January you may receive Form 1099-S reporting the sales proceeds. Should you report this on your tax return? It depends.
You can exclude up to $500,000 of gain on the sale of your principal residence if you've lived in the home for at least two of the previous five years. If you're single, you can exclude $250,000. If you've met these tests, and your gain is less than $500,000 ($250,000) you do not need to show the sales proceeds on your tax return. Often you won't even get a Form 1099-S if you can exclude the entire gain.
If your gain is more than the exclusion amounts noted above, then you must show the sales proceeds listed on Form 1099-S, in addition to your cost basis and the gain on the sale of your home, on Schedule D of your Form 1040. You can't deduct a loss on the sale of your home; that loss is a personal one.
If you've moved since you filed last year's tax return, remember to file IRS Form 8822, Change of Address. Mail it to the IRS center for your old address. You can get the address from the back of the form, or the IRS Web site.
Tips Disclaimer
These tips contain information that may change over time as a result of new tax legislation. Although we make efforts to keep this information current, you should check with your tax advisor before taking action based upon any information contained in these tips.