- Publication 523 - Introductory Material
- Publication 523 - Main Contents
- Does Your Home Sale Qualify for the Exclusion of Gain?
- Transfer of your home to a spouse or an ex-spouse.
- Home’s date of sale.
- Sale of your main home.
- Eligibility Test
- Eligibility Step 1—Automatic Disqualification
- Eligibility Step 2—Ownership
- Eligibility Step 3—Residence
- Eligibility Step 4—Look-Back
- Eligibility Step 5—Exceptions to the Eligibility Test
- Eligibility Step 6—Final Determination of Eligibility
- Does Your Home Qualify for a Partial Exclusion of Gain?
- Figuring Gain or Loss
- Basis Adjustments—Details and Exceptions
- Fees and Closing Costs
- Home Acquired Through a Trade
- Home Foreclosed, Repossessed, or Abandoned
- Home Destroyed or Condemned
- Home Received in Divorce
- Home Received as a Gift
- Home Inherited
- Business or Rental Use of Home
- Basis Adjustments—Details and Exceptions
- How Much Is Taxable?
- Reporting Your Home Sale
- Reporting Gain or Loss on Your Home Sale
- Determine whether you need to report the gain from your home.
- If you made separate gain/loss calculations for business and residence portions of your property,
- Determine whether your home sale is an installment sale.
- Report any interest you receive from the buyer.
- If you’re a nonresident or resident alien who doesn’t have and isn’t eligible to get a social security number,
- Complete Form 8949, Sales and Other Dispositions of Capital Assets.
- Complete Schedule D (Form 1040 or 1040-SR), Capital Gains and Losses.
- Reporting Deductions Related to Your Home Sale
- Determine the amount of real estate tax deductions associated with your home sale.
- If you didn’t receive a Form 1099-S,
- If you received a Form 1099-S,
- If you didn’t already deduct all your mortgage points on an earlier tax return,
- Report on Schedule A (Form 1040 or 1040-SR), Itemized Deductions, any itemized real estate deduction.
- Reporting Other Income Related to Your Home Sale
- Report as ordinary income on Form 1040 or 1040-SR any amounts received from selling personal property.
- Report as ordinary income on Form 1040 or 1040-SR any amounts received for sales of expired options to purchase your property.
- Report as ordinary income on Form 1040 or 1040-SR applicable canceled or forgiven mortgage debt.
- Paying Back Credits and Subsidies
- Reporting Gain or Loss on Your Home Sale
- How To Get Tax Help
- Preparing and filing your tax return.
- Employers can register to use Business Services Online.
- Tax reform.
- IRS social media.
- Watching IRS videos.
- Getting tax information in other languages.
- Getting tax forms and publications.
- Access your online account (individual taxpayers only).
- Using direct deposit.
- Getting a transcript or copy of a return.
- Using online tools to help prepare your return.
- Resolving tax-related identity theft issues.
- Checking on the status of your refund.
- Making a tax payment.
- What if I can’t pay now?
- Checking the status of an amended return.
- Understanding an IRS notice or letter.
- Contacting your local IRS office.
- The Taxpayer Advocate Service (TAS) Is Here To Help You
- Low Income Taxpayer Clinics (LITCs)
- Does Your Home Sale Qualify for the Exclusion of Gain?
- Publication 523 - Additional Material
For the latest information about developments related to Pub. 523, such as legislation enacted after it was published, go to IRS.gov/Pub523.
Extension of the exclusion of canceled or forgiven mortgage debt from income. The exclusion of income for mortgage debt canceled or forgiven was extended retroactively to January 1, 2018, through December 31, 2020. See Report as ordinary income on Form 1040 or 1040-SR applicable canceled or forgiven mortgage debt , later.
Photographs of missing children. The IRS is a proud partner with the National Center for Missing & Exploited Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
Special rules for capital gains invested in Qualified Opportunity Funds. Effective December 22, 2017, IRC 1400Z-2 provides a temporary deferral of inclusion in gross income for capital gains invested in Qualified Opportunity Funds, and permanent exclusion of capital gains from the sale or exchange of an investment in the Qualified Opportunity Fund if the investment is held for at least 10 years. For more information, see the Instructions for Form 8949.
This publication explains the tax rules that apply when you sell or otherwise give up ownership of a home. If you meet certain conditions, you may exclude the first $250,000 of gain from the sale of your home from your income and avoid paying taxes on it. The exclusion is increased to $500,000 for a married couple filing jointly.
This publication also has worksheets for calculations relating to the sale of your home. It will show you how to:
Determine if you have a gain or loss on the sale of your home,
Figure how much of any gain is taxable, and
Report the transaction correctly on your tax return.
If you have a tax question not answered by this publication or How To Get Tax Help section at the end of this publication, go to the IRS Interactive Tax Assistant page at IRS.gov/Help/ITA where you can find topics using the search feature or by viewing the categories listed.
Getting tax forms, instructions, and publications.
Visit IRS.gov/Forms to download current and prior-year forms, instructions, and publications.
504 Divorced or Separated Individuals
505 Tax Withholding and Estimated Tax
527 Residential Rental Property
530 Tax Information for Homeowners
537 Installment Sales
544 Sales and Other Dispositions of Assets
547 Casualties, Disasters, and Thefts
551 Basis of Assets
587 Business Use of Your Home
936 Home Mortgage Interest Deduction
4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments
Form (and Instructions)
Schedule A (Form 1040 or 1040-SR) Itemized Deductions
Schedule B (Form 1040 or 1040-SR) Interest and Ordinary Dividends
Schedule D (Form 1040 or 1040-SR) Capital Gains and Losses
982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)
1040 U.S. Individual Income Tax Return
1040-SR U.S. Income Tax Return for Seniors
1099-S Proceeds From Real Estate Transactions
4797 Sales of Business Property
5405 Repayment of the First-Time Homebuyer Credit
6252 Installment Sale Income
8822 Change of Address
8828 Recapture of Federal Mortgage Subsidy
8949 Sales and Other Dispositions of Capital Assets
W-2 Wage and Tax Statement
W-7 Application for IRS Individual Taxpayer Identification Number
The tax code recognizes the importance of home ownership by allowing you to exclude gain when you sell your main home. To qualify for the maximum exclusion of gain ($250,000 or $500,000 if married filing jointly) you must meet the Eligibility Test , explained later. To qualify for a partial exclusion of gain, meaning an exclusion of gain less than the full amount, you must meet one of the situations listed in Does Your Home Qualify for a Partial Exclusion of Gain? , later.
Before considering the Eligibility Test or whether your home qualifies for a partial exclusion, you should consider some preliminary items.
The Eligibility Test determines whether you are eligible for the maximum exclusion of gain ($250,000 or $500,000 if married filing jointly).
There are some exceptions to the Eligibility Test. If any of the following situations apply to you, read on to see if they may affect your qualification. If none of these situations apply, skip to Step 6.
A separation or divorce occurred during the ownership of the home. See Separated or divorced taxpayers .
The death of a spouse occurred during the ownership of the home. See Widowed taxpayers .
The sale involved vacant land. See Vacant land next to home .
You owned a remainder interest, meaning the right to own a home in the future, and you sold that right. See Remainder interest .
Your previous home was destroyed or condemned. See Home destroyed or condemned—considerations for benefits .
You were a service member during the ownership of the home. See Service, Intelligence, and Peace Corps personnel .
You acquired or are relinquishing the home in a like-kind exchange. See Like-kind/1031 exchange .
If you meet the ownership, residence, and look-back requirements, taking the exceptions into account, then you meet the Eligibility Test. Your home sale qualifies for the maximum exclusion. Skip to Worksheet 1, later.
If you didn’t meet the Eligibility Test, then your home isn’t eligible for the maximum exclusion, but you should continue to Does Your Home Qualify for a Partial Exclusion of Gain? .
If you don't meet the Eligibility Test, you may still qualify for a partial exclusion of gain. You can meet the requirements for a partial exclusion if the main reason for your home sale was a change in workplace location, a health issue, or an unforeseeable event.
You meet the requirements for a partial exclusion if any of the following events occurred during your time of ownership and residence in the home.
You took or were transferred to a new job in a work location at least 50 miles farther from the home than your old work location. For example, your old work location was 15 miles from the home and your new work location is 65 miles from the home.
You had no previous work location and you began a new job at least 50 miles from the home.
Either of the above is true of your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence.
You meet the requirements for a partial exclusion if any of the following health-related events occurred during your time of ownership and residence in the home.
You moved to obtain, provide, or facilitate diagnosis, cure, mitigation, or treatment of disease, illness, or injury for yourself or a family member.
You moved to obtain or provide medical or personal care for a family member suffering from a disease, illness, or injury. Family includes your:
Parent, grandparent, stepmother, stepfather;
Child (including adopted child, eligible foster child, and stepchild), grandchild;
Brother, sister, stepbrother, stepsister, half-brother, half-sister;
Mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law;
Uncle, aunt, nephew, or niece.
A doctor recommended a change in residence for you because you were experiencing a health problem.
The above is true of your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence.
You meet the standard requirements if any of the following events occurred during the time you owned and lived in the home you sold.
Your home was destroyed or condemned.
Your home suffered a casualty loss because of a natural or man-made disaster or an act of terrorism. (It doesn’t matter whether the loss is deductible on your tax return.)
You, your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence:
Became divorced or legally separated;
Gave birth to two or more children from the same pregnancy;
Became eligible for unemployment compensation;
Became unable, because of a change in employment status, to pay basic living expenses for the household (including expenses for food, clothing, housing, medication, transportation, taxes, court-ordered payments, and expenses reasonably necessary for making an income).
An event is determined to be an unforeseeable event in IRS published guidance.
Even if your situation doesn’t match any of the standard requirements described above, you still may qualify for an exception. You may qualify if you can demonstrate the primary reason for sale, based on facts and circumstances, is work related, health related, or unforeseeable. Important factors are:
The situation causing the sale arose during the time you owned and used your property as your residence.
You sold your home not long after the situation arose.
You couldn’t have reasonably anticipated the situation when you bought the home.
You began to experience significant financial difficulty maintaining the home.
The home became significantly less suitable as a main home for you and your family for a specific reason.
|A) Determine if you are eligible for the maximum exclusion limit.|
|Status||You are eligible for the maximum exclusion if...||Maximum exclusion||If you’re not eligible for the maximum exclusion limit, then you should…|
|Married filing jointly||Both spouses meet the residence and look-back requirements and one or both spouses meet the ownership requirement.||$500,000||Determine if either spouse is eligible for the full limit as a single person. If not, determine if either spouse is eligible for a partial exclusion.|
|Single, married filing separately||You meet the residence, ownership, and look-back requirements.||$250,000||Determine if you are eligible for a partial exclusion.|
||$500,000||Determine if you are eligible for the full limit as a single person. If not, determine if you are eligible for a partial exclusion.|
|B) Complete this section only if you have determined that you aren’t eligible for the maximum exclusion but are eligible for a partial exclusion. If you are eligible for a partial exclusion, use this section to determine your exclusion limit.|
|Step 1||Determine the shortest of the following 3 periods:|
|1. Your time of residence in the home during the 5-year period leading up to the sale||_____|
|2. Your time of ownership of the home leading up to the sale||_____|
|3. The time that has elapsed between the sale and the date you last sold a home for which you took the exclusion if you had done so||_____|
|Step 2||Take the smallest period from Step 1 (you may use days or months) and divide that number by 730 (if using days) or 24 (if using months)||_____|
|Step 3||Multiply the result from Step 2 by $250,000. Stop here if not married filing jointly||_____|
|Step 4||Repeat Steps 1–3 for your spouse and add the two results||_____|
|C) Your exclusion limit is $___________. Unless you have taxable gain from business or rental use (see Business or Rental Use of Home ), only gain in excess of this amount is taxable.|
To figure the gain or loss on the sale of your main home, you must know the selling price, the amount realized, and the adjusted basis. Subtract the adjusted basis from the amount realized to get your gain or loss.
|Gain or loss|
A positive number indicates a gain; a negative number indicates a loss.
Certain events during your ownership, such as use of your home for business purposes or your making improvements to it, can affect your gain or loss. They are explained in this section.
See Worksheet 2, later, for steps you should follow to figure your gain or loss.
You should include many, but not all, costs associated with the purchase and maintenance of your home in the basis of your home. For more information on determining basis, see Pub. 551, Basis of Assets.
Some settlement fees and closing costs you can include in your basis are:
Abstract fees (abstract of title fees),
Charges for installing utility services,
Legal fees (including fees for the title search and preparing the sales contract and deed),
Transfer or stamp taxes, and
Owner's title insurance.
Some settlement fees and closing costs you can’t include in your basis are:
Fire insurance premiums,
Rent for occupancy of the house before closing,
Charges for utilities or other services related to occupancy of the house before closing,
Any fee or cost that you deducted as a moving expense (allowed for certain fees and costs before 1994),
Charges connected with getting a mortgage loan, such as:
Mortgage insurance premiums (including funding fees connected with loans guaranteed by the Department of Veterans Affairs),
Loan assumption fees,
Cost of a credit report,
Fee for an appraisal required by a lender, and
Fees for refinancing a mortgage.
Your cost includes your down payment and any debt such as a first or second mortgage or notes you gave the seller or builder. It also includes certain settlement or closing costs. In addition, generally you must reduce your basis by points the seller paid you.
If you built all or part of your house yourself, its basis is the total amount it cost you to complete it. Don’t include in the cost of the house:
The value of your own labor, or
The value of any other labor for which you didn’t pay.
Improvements add to the value of your home, prolong its useful life, or adapt it to new uses. You add the cost of additions and improvements to the basis of your property.
The following chart lists some examples of improvements.
Lawn & Grounds
Central air conditioning
Air/water filtration systems
Lawn sprinkler system
Pipes and duct work
Soft water system
If your home was foreclosed on, repossessed, or abandoned, you may have ordinary income, gain, or loss. See Pub. 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments.
If you used part of your home for business or rental purposes, see "Foreclosures and Repossessions" in chapter 1 of Pub. 544, for examples of how to figure gain or loss.
You have a disposition when your home is destroyed or condemned and you receive other property or money in payment, such as insurance or a condemnation award. This is treated as a sale and you may be able to exclude all or part of any gain that you have. If your home was destroyed, see Pub. 547. If your home was condemned, see Pub. 544.
If you received your home as a gift, you should keep records of the date you received it. Record the adjusted basis of the donor at the time of the gift and the fair market value of the home at the time of the gift. Also, ask if the donor paid any gift tax. As a general rule, you will use the donor’s adjusted basis at the time of the gift as your basis. However, see Table 2 below to determine if any exceptions to this rule listed in the "IF" column apply.
Table 2. Exceptions to Using a Donor's Adjusted Basis for a Home Received as a Gift
|at the time of the gift, the donor’s adjusted basis in the home was more than the home’s fair market value,||your usage of the donor’s adjusted basis as your basis results in a loss,||you must use the fair market value of the home at the time of the gift as your basis (if using the fair market value results in a gain for you, then you don’t need to recognize that gain).|
|at the time of the gift, the donor’s adjusted basis in the home was less than the home’s fair market value,||the donor paid gift tax on the gift of the home,||you figure your basis by starting with the donor’s adjusted basis at the time of the gift and adding the federal gift tax paid due to the increase in value of the home (see Regulations section 1.1015-5 for further details on this calculation).|
|If you have questions as you work through these step-by-step instructions, or want examples of costs that can and can’t be included, see Basis Adjustments—Details and Exceptions .
|1.||Determine the sale price. This is everything you received for selling your home.|
|a.||All money (currency, check, wire transfer)||a.||_____|
|b.||The fair market value of any other property or services you received||b.||_____|
|c.||The value of any notes, mortgages, or other debts that the buyer agreed to assume (take over) as part of the sale||c.||_____|
|d.||Any real estate taxes the buyer paid on your behalf||d.||_____|
|e.||Any amount you received for granting an option to buy your home, if the option was exercised||e.||_____|
|f.||Add lines 1a through 1e. This is your sale price||f.||_____|
|2.||Determine your selling expenses. These are the costs directly associated with selling your home.|
|a.||Any sales commissions (for example, a real estate agent's sales commission)||a.||_____|
|b.||Any advertising fees||b.||_____|
|c.||Any legal fees||c.||_____|
|d.||Any mortgage points or other loan charges you paid that would normally have been the buyer's responsibility||d.||_____|
|e.||Any other fees or costs to sell your home||e.||_____|
|f.||Add lines 2a through 2e. These are your selling expenses||f.||_____|
|3.||Figure your "amount realized" (sale price minus selling expenses).|
|Line 1f minus line 2f||3.||_____|
|4.||Determine your "total basis" (the total amount you invested in your home). This includes what you paid for your home as well as other money you may have spent that added to its value.|
|a.||The amount you paid for your home (or if you built your home, the cost of the land). Include any down payment and any amount you borrowed to pay for the home. For cooperative apartments, include the value of the corporation stock you purchased. If you acquired your home through inheritance, gift, bargain sale, trade, or anything except a fair market purchase, see Basis Adjustments—Details and Exceptions .||a.||_____|
|b.||Any settlement fees or closing costs you paid when you bought your home, except for financing-related costs (such as seller-paid points). The settlement statement should list the fees related to buying the home. See Basis Adjustments—Details and Exceptions and Fees and Closing Costs||b.||_____|
|c.||Any real estate taxes or other costs you paid on behalf of the seller you bought your home from (and for which the seller never paid you back)||c.||_____|
|d.||Any amounts you spent on construction or other improvements that are still part of your home at the time of sale (not including costs of maintenance and repairs). See Basis Adjustments—Details and Exceptions .||d.||_____|
|e.||Any amounts you spent to repair damage to your home or the land on which it sits||e.||_____|
|f.||Any special assessments for local improvements (such as special tax or condominium association assessments that aren’t merely for repairs or maintenance)||f.||_____|
|g.||Add lines 4a through 4f. This is your total basis||g.||_____|
|5.||Determine your "basis adjustments" (any payments, credits, or benefits you may need to deduct from your basis).|
|a.||Any depreciation you took or were allowed to take for use of your home for business or rental purposes||a.||_____|
|b.||Any casualty losses (such as flood or fire damage) you claimed as a deduction on a federal tax return||b.||_____|
|c.||Any insurance payments you received or expect to receive for casualty losses||c.||_____|
|d.||Any payments you received for granting an easement, conservation restriction, or right-of-way||d.||_____|
|e.||Any energy credits or subsidies that effectively paid you back for improvements you included in your total basis. See Basis Adjustments—Details and Exceptions||e.||_____|
|f.||Any adoption credits you claimed, or any nontaxable payments from an employer-sponsored adoption assistance program||f.||_____|
|g.||Any real estate taxes the seller paid on your behalf (and for which you never paid the seller back). If you reimburse the seller, it doesn’t affect basis||g.||_____|
|h.||Any mortgage points the seller paid for you when you bought your home, if one of the following is true||h.||_____|
|i.||Any canceled or forgiven mortgage debt amount that was excluded before January 1, 2021, due to a bankruptcy or insolvency and that you didn’t have to declare as income. (See Pub. 4681.)||i.||_____|
|j.||Any sales tax you paid on your home (such as for a mobile home or houseboat) and then claimed as a deduction on a federal tax return||j.||_____|
|k.||The value of any temporary housing the builder of your home provided for you||k.||_____|
|l.||Any gain you postponed from the sale of a previous home sold before May 7, 1997||l.||_____|
|m.||Add lines 5a through 5m. This is your basis adjustment||m.||_____|
|6.||Figure your "adjusted basis" (total basis minus basis adjustments).|
|Line 4g minus line 5m||6.||_____|
|7.||Figure your gain or loss (amount realized minus adjusted basis).|
|Line 3 minus line 6||7.||_____|
This section applies only if you used a portion of your home for business or rental purposes during your ownership. This type of usage may affect your gain or loss calculations. For more information about using any part of your home for business or as a rental property, see Pub. 587, Business Use of Your Home, and Pub. 527, Residential Rental Property.
|your "Home" worksheet shows a loss,||follow the instructions at the end of line 7, under Worksheet 2 for "If the number is negative."|
|your "Home" worksheet shows a gain,||skip to How Much Is Taxable? and Worksheet 3 to find out how much of the gain on your "Home" worksheet is taxable.|
|your "Business" worksheet shows a loss,||DON’T follow the instructions at the end of line 7, under Worksheet 2. Instead, report the loss from your "Business" worksheet on Form 4797, Sales of Business Property.|
|your "Business" worksheet shows a gain,||you can’t exclude any of the gain shown on your "Business" worksheet. DON’T follow the instructions at the end of line 7, under Worksheet 2. Instead, report the gain from your "Business" worksheet on Form 4797.|
If you qualify for an exclusion on your home sale, up to $250,000 ($500,00 if married and filing jointly) of your gain will be tax free. If your gain is more than that amount, or if you qualify only for a partial exclusion, then some of your gain may be taxable. This section contains step-by-step instructions for figuring out how much of your gain is taxable. See Worksheet 3, later, for assistance in determining your taxable gain.
If you determined in Does Your Home Sale Qualify for the Exclusion of Gain? , earlier, that your home sale doesn't qualify for any exclusion (either full or partial), then your entire gain is taxable. If you don’t have a gain, you owe no tax on the sale. In either case, you don’t need to complete Worksheet 3 and you can skip to Reporting Your Home Sale , later.
If you used all or part of your home for business or rental after May 6, 1997, you may need to pay back ("recapture") some or all of the depreciation you were entitled to take on your property. "Recapturing" depreciation means you must include it as ordinary income on your tax return.
If you completed "Business" and "Home" versions of your gain/loss worksheet as described in Business or Rental Use of Home , earlier, complete this worksheet only for the "Home" version.
|Section A. Determine your net gain. Complete this section only if you used any part of your home for business or rental purposes between May 6, 1997, and the date of sale. Otherwise, skip to Section B.|
|Step 1||Enter your gain from line 7 of Worksheet 2.||_____|
|Step 2||List the total of all depreciation deductions that you took or could have taken for the use of your home for business or rental purposes between May 6, 1997, and the date of sale||_____|
|Step 3||Subtract the sum of Step 2 from the amount listed in Section A, Step 1. This is your net gain||_____|
|Section B. Determine your non-qualified use gain. Complete this section only if there is a period, after the year 2008, when neither you nor your spouse (or your former spouse) used the property as a main home, and that period of non-use occurred during the 5-year period prior to the date of sale and before the time when you or your spouse (or your former spouse) used the property as a main home.* Otherwise, skip to Section C.|
|*Note: If the period of non-use was for 1) 2 years or less and due to a change in employment, a health condition, or other "unforeseen circumstance" described in Does Your Home Qualify for a Partial Exclusion of Gain? , earlier; or 2) for 10 years or less and due to a "stop the clock" exception for certain military, intelligence, and Peace Corps personnel described in Service, Intelligence, and Peace Corps Personnel , earlier, then you may skip Section B.|
|Step 1||Enter the amount from Section A, Step 1 or, if you skipped Section A, your gain from line 7 of Worksheet 2||_____|
|Step 2||Enter the total number of days after 2008 when neither you nor your spouse (or former spouse) used the home as a main residence. This number is your non-use days||_____|
|Step 3||Enter the total number of days you owned your home (counting all days, not just days after 2008). This number is your number of days owned||_____|
|Step 4||Divide the non-use days by the days owned. This number is your non-residence factor||_____|
|Step 5||Multiply the decimal from Section B, Step 4, by the amount listed in Section B, Step 1. This number is your non-qualified use gain.||_____|
|Section C. Determine your gain that is eligible for exclusion.|
|IF...||THEN your gain that is eligible for exclusion is …|
|you skipped Sections A and B||your gain from line 7, under Worksheet 2.|
|you completed Section A but skipped Section B||your net gain, from Section A, Step 3.|
|you completed Section B (regardless of whether you completed Section A)||your non-qualified use gain, from Section B, Step 5.|
|Your gain that is eligible for exclusion is $ _______________|
|Section D. Determine if you have taxable gain.|
|your gain that is eligible for exclusion from Section C is less than or equal to your exclusion limit from Worksheet 1, Section C||your entire gain is excludible from your income and you have no gain to report on your tax return. The Reporting Your Home Sale section doesn’t apply to you.|
|your gain that is eligible for exclusion from Section C is greater than your exclusion limit from Worksheet 1, Section C||some of your gain isn’t excludible, and you may owe tax on it. See Reporting Your Home Sale for instructions on how to report the gain on your tax return.|
This section tells you how to report taxable gain, take deductions relating to your home sale, and report income other than the gain that you may have received from your home sale.
This section also covers special circumstances that apply to some home sellers.
What records to keep. Any time you buy real estate, you should keep records to document the property's adjusted basis. In general, keep these records until 3 years after the due date for your tax return for the year in which you sold your home.
If you aren’t itemizing deductions on your return for the year in which you sold your home, skip to Reporting Other Income Related to Your Home Sale , later.
There is no tax deduction for transfer taxes, stamp taxes, or other taxes, fees, and charges you paid when you sold your home. However, if you paid these amounts as the seller, you can treat these taxes and fees as selling expenses. If you pay these amounts as the buyer, include them in your cost basis of the property.
If you have questions about a tax issue, need help preparing your tax return, or want to download free publications, forms, or instructions, go to IRS.gov and find resources that can help you right away.
Preparing and filing your tax return.
After receiving your wage and earning statements (Form W-2, W-2G, 1099-R, 1099-MISC) from all employers and interest and dividend statements from banks (Forms 1099), you can find free options to prepare and file your return on IRS.gov or in your local community if you qualify.
The Volunteer Income Tax Assistance (VITA) program offers free tax help to people with low-to-moderate incomes, persons with disabilities, and limited-English- speaking taxpayers who need help preparing their own tax returns. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement related issues unique to seniors.
You can go to IRS.gov to see your options for preparing and filing your return, which include the following.
Free File. Go to IRS.gov/FreeFile to see if you qualify to use brand-name software to prepare and e-file your federal tax return for free.
VITA. Go to IRS.gov/VITA, download the free IRS2Go app, or call 800-906-9887 to find the nearest VITA location for free tax return preparation.
TCE. Go to IRS.gov/TCE, download the free IRS2Go app, or call 888-227-7669 to find the nearest TCE location for free tax return preparation.
Employers can register to use Business Services Online.
The SSA offers online service for fast, free, and secure online W-2 filing options to CPAs, accountants, enrolled agents, and individuals who process Forms W-2, Wage and Tax Statement, and Forms W-2c, Corrected Wage and Tax Statement. Employers can go to SSA.gov/employer for more information.
Getting answers to your tax questions. On IRS.gov, get answers to your tax questions anytime, anywhere.
Go to IRS.gov/Help for a variety of tools that will help you get answers to some of the most common tax questions.
Go to IRS.gov/ITA for the Interactive Tax Assistant, a tool that will ask you questions on a number of tax law topics and provide answers. You can print the entire interview and the final response for your records.
Go to IRS.gov/Forms to search for our forms, instructions, and publications. You will find details on 2019 tax changes and hundreds of interactive links to help you find answers to your questions.
You may also be able to access tax law information in your electronic filing software.
IRS social media.
Go to IRS.gov/SocialMedia to see the various social media tools the IRS uses to share the latest information on tax changes, scam alerts, initiatives, products, and services. At the IRS, privacy and security are paramount. We use these tools to share public information with you. Don’t post your social security number or other confidential information on social media sites. Always protect your identity when using any social networking site.
The following IRS YouTube channels provide short, informative videos on various tax-related topics in English, Spanish, and ASL.
Watching IRS videos.
The IRS video portal (IRSVideos.gov) contains video and audio presentations for individuals, small businesses, and tax professionals.
TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Their job is to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights.
The Taxpayer Bill of Rights describes 10 basic rights that all taxpayers have when dealing with the IRS. Go to TaxpayerAdvocate.IRS.gov to help you understand what these rights mean to you and how they apply. These are your rights. Know them. Use them.
TAS can help you resolve problems that you can’t resolve with the IRS. And their service is free. If you qualify for their assistance, you will be assigned to one advocate who will work with you throughout the process and will do everything possible to resolve your issue. TAS can help you if:
Your problem is causing financial difficulty for you, your family, or your business;
You face (or your business is facing) an immediate threat of adverse action; or
You’ve tried repeatedly to contact the IRS but no one has responded, or the IRS hasn’t responded by the date promised.
TAS has offices in every state, the District of Columbia, and Puerto Rico. Your local advocate’s number is in your local directory and at TaxpayerAdvocate.IRS.gov/Contact-Us. You can also call them at 877-777-4778.
TAS works to resolve large-scale problems that affect many taxpayers. If you know of one of these broad issues, please report it to them at IRS.gov/SAMS.
TAS also has a website, Tax Reform Changes, which shows you how the new tax law may change your future tax filings and helps you plan for these changes. The information is categorized by tax topic in the order of the IRS Form 1040 or 1040-SR. Go to TaxChanges.us for more information.
LITCs are independent from the IRS. LITCs represent individuals whose income is below a certain level and need to resolve tax problems with the IRS, such as audits, appeals, and tax collection disputes. In addition, clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. To find a clinic near you, visit IRS.gov/LITC or see IRS Pub. 4134, Low Income Taxpayer Clinic List.
- Capital Gains
- Closing costs, Fees and Closing Costs
- Community property
- Basis determination, Community property.
- As main home, Sale of your main home.
- Cooperative apartment
- As main home, Sale of your main home.
- Death of Spouse, Widowed taxpayers.
- Home used for business or rental purposes, Recapturing Depreciation
- Mentally disabled, If you become physically or mentally unable to care for yourself,
- Physically disabled, If you become physically or mentally unable to care for yourself,
- Divorce, Home Received in Divorce
- Federal mortgage subsidies, Determine any amounts you may have received in federal mortgage subsidies in the 9 years leading up to the date of sale.
- First-time homebuyer tax credit, Determine any amounts you may have claimed as a first-time homebuyer tax credit.
- Form 8949, Complete Form 8949, Sales and Other Dispositions of Capital Assets.
- Future developments, Future Developments
- Identity theft, Resolving tax-related identity theft issues.
- Improvements, Improvements
- Home received as, Home acquired from a decedent who died before or after 2010.
- Installment sale, Determine whether your home sale is an installment sale.
- Interest reporting, Report any interest you receive from the buyer.
- Look-back requirement, Eligibility Step 4—Look-Back
- Look-back requirement exceptions, Eligibility Step 5—Exceptions to the Eligibility Test
- Nonresident or resident alien, If you’re a nonresident or resident alien who doesn’t have and isn’t eligible to get a social security number,
- Ownership, Eligibility Step 2—Ownership
- Ownership requirement, Determine whether you meet the ownership requirement.
- Remodeling, Exception.
- Rental use of home, Business or Rental Use of Home
- Repairs, Repairs done as part of larger project.
- Reporting home sale deductions, Reporting Deductions Related to Your Home Sale
- Reporting other income related to home sale, Reporting Other Income Related to Your Home Sale
- Reporting taxable gain or loss, Reporting Gain or Loss on Your Home Sale
- Residence, Eligibility Step 3—Residence
- Residence requirement, Determine whether you meet the residence requirement.
- Tax help, How To Get Tax Help
- Taxable gain, How Much Is Taxable?
- Transfer of home, Transfer of your home to a spouse or an ex-spouse.
- Widowed Taxpayers, Widowed taxpayers.