via Northern Virginia Association of Realtors
This is good informatino for those who may have a capital gain from the sale of their primary property.
Christine Shevock
(703) 475-3986
www.GreatVirginiaHomes.com
(Internal Revenue Service Tax Tip 2011-15 – August 8, 2011
The Internal Revenue Service offers this
important information to share with
individuals who have sold or are about to
sell their home. Sellers who have a gain
from the sale of their main home may
qualify to exclude all or part of that gain
from their income.
Here are 10 tips from the IRS to keep in mind when selling
your home.
In general, you are eligible to exclude the gain from
income if you have owned and used your home as your
main home for two years out of the five years prior to the
date of its sale.
If you have a gain from the sale of your main home, you may
be able to exclude up to $250,000 of the gain from your
income ($500,000 on a joint return in most cases).
You are not eligible for the exclusion if you excluded the gain
from the sale of another home during the two-year period
prior to the sale of your home.
If you can exclude all of the gain, you do not need to report
the sale on your tax return.
If you have a gain that cannot be excluded, it is taxable.
You must report it on Form 1040, Schedule D, Capital Gains
and Losses.
You cannot deduct a loss from the sale of your main home.
Worksheets are included in Publication 523, Selling Your Home,
to help you figure the adjusted basis of the home you sold, the
gain (or loss) on the sale, and the gain that you can exclude.
If you have more than one home, you can exclude a 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.
If you received the first-time homebuyer credit
and within 36 months of the date of purchase,
the property is no longer used as your principal
residence, you are required to repay the
credit. Repayment of the full credit is due with
the income tax return for the year the home
ceased to be your principal residence, using
Form 5405, First-Time Homebuyer Credit and
Repayment of the Credit. The full amount of
the credit is reflected as additional tax on that
year’s tax return.
When you move, be sure to update your address
with the IRS and the U.S. Postal Service to ensure
you receive refunds or correspondence from the
IRS. Use Form 8822, Change of Address, to notify
the IRS of your address change.
For more information about selling your home,
see IRS Publication 523, Selling Your Home. This
publication is available at irs.gov or by calling
800-TAX-FORM (800-829-3676).
