Tax tips for selling your home
If you’re selling your main home this summer or sometime this year, the IRS has some helpful tips for you. Even if you make a profit from the sale of your home, you may not have to report it as income.
Here are a few tips from the Internal Revenue Service to keep in mind when selling your home.
• If you sell your home at a gain, you may be able to exclude part or all of the profit from your income. This rule generally applies if you’ve owned and used the property as your main home for at least two out of the five years before the date of sale.
• You normally can exclude up to $250,000 of the gain from your income ($500,000 on a joint return). This excluded gain is also not subject to the new Net Investment Income Tax, which is effective in 2013.
• If you can exclude all of the gain, you probably don’t need to report the sale of your home on your tax return.
• If you can’t exclude all of the gain, or you choose not to exclude it, you’ll need to report the sale of your home on your tax return. You’ll also have to report the sale if you received a Form 1099-S, Proceeds From Real Estate Transactions.
• Use IRS e-file to prepare and file your 2013 tax return next year. E-file software will do most of the work for you. If you prepare a paper return, use the worksheets in Publication 523, Selling Your Home, to figure the gain (or loss) on the sale. The booklet also will help you determine how much of the gain you can exclude.
• Generally, you can exclude a gain from the sale of only one main home per two-year period.
• You cannot deduct a loss from the sale of your main home.
For more information on this topic, see Publication 523. It’s available at IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).