What kind of tax benefits are available to people who sell their home for a gain?
Typically, the home is the most valuable asset of a taxpayer and taxpayers will face numerous tax related issues when selling a home. If a taxpayer has gains from the sale of their main home, you may be entitled to exclude from income up to $ 250,000 of those gains.You can exclude up to $ 500,000 of those gains if filing a joint return with your spouse.P ublication 523, Selling Your Home (Selling your home) provides certain rules and sheets of relevant work.
To qualify for exclusion, you must meet both proof of ownership as proof of use requirements.
You are eligible for the exclusion if your business has been owned and used the home as a principal residence for a total period of at least two years of the 5 years preceding the date of sale.
Usually, you are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period before the sale of your home. See Publication 523 contains all the eligibility requirements, limits the amount of exclusion and the exceptions to the rule of two years.
Form 1099-S and Form 8949
If you receive a document about the statement of income as Form 1099-S, Proceeds From Real Estate Transactions (Proceeds from real estate transactions), you must report the sale of the house, even if the gain the sale is excludable. In addition, you must report the sale of the house if you can not exclude all capital gains income. Use Schedule D (Form 1040), Capital Gains and Losses (losses and capital gains) and Form 8949 , Sales and Other Dispositions of Capital Assets (Sales and other disposals of capital goods) when be required to report the sale of the house. See Publication 523, which contains the rules on how state sales taxes on your income.
Selling Your Home Tax Information and Tax Tips
If you or your spouse qualify for extended active duty in the Armed Forces, the Foreign Service or intelligence community, you may choose to suspend the trial period of 5 years for a maximum of 10 years. It is considered that you are in the official personnel if prolonged for more than 90 days or for an indefinite period, is:
- In an official service station located at least 50 miles away from your principal residence or
- Resides under government orders in government housing.
If you sold your home under a contract stating that some or all of the sales price is paid in a later year, you conducted an “installment sale.” If you have an installment sale, report the sale according to the method of limits, unless waived its option. For more information, refer to Topic 705 Installment Sales (Installment Sales).