Real estate in sale
Sale of Residence – Real Estate Tax Tips
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Ownership and Use Tests
- Owned the home for at least two years (the ownership test)
- Lived in the home as your main home for at least two years (the use test)
- If you can exclude all of the gain, you do not need to report the sale on your tax return
- If you have gain that cannot be excluded, it is taxable. Report it on Schedule D (Form 1040)
Reporting the Sale
- You have a gain and do not qualify to exclude all of it,
- You have a gain and choose not to exclude it, or
- You have a loss and received a Form 1099-S.
More Than One Home
If you have more than one home, you can exclude gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
Business Use or Rental of Home
On May 30, 1997, Amy bought a house. She moved in on that date and lived in it until May 31, 1999, when she moved out of the house and put it up for rent. The house was rented from June 1, 1999, to March 31, 2001. Amy moved back into the house on April 1, 2001, and lived there until she sold it on January 31, 2003. During the 5-year period ending on the date of the sale (February 1, 1998 – January 31, 2003), Amy owned and lived in the house for more than 2 years as shown in the table below.