ASK MICKEY, CPA, I am selling my home, are there any tax considerations I should know about?
ANSWER: Great question!
Yes, you may qualify to exclude all or part of any gain from the sale of your home from your income when filing your next tax return.
First, to claim the exclusion, you must have owned the home and lived in it as your homestead for at least two years ending five-years from the date of the sale,
Selling your home for capital gain can exclude up to $250,000 from your income, but the home must be your homestead. Taxpayers who file a joint return with their spouse may be able to exclude up to $500,000.
If you are excluding all the gains, you do not need to report the sale on your tax return unless you used Form1099-S.
Some taxpayers may experience a loss when their home sells for less than what they paid for it. Unfortunately, this loss is not deductible.
If you own multiple homes, you can exclude the gain only on the sale. You must pay taxes on the gain from selling any of your other homes.
If you do not qualify to exclude all the taxable gain from your income you must report the gain from the sale of your home when you file your tax return. If you choose not to claim the exclusion, you must report the taxable gain on your tax return. If you received form 1099-S, or proceeds from real estate sales you must report the sale on your tax return even if it has no taxable gain.
Forgiven or canceled debt as income on your tax return should be reported. This would be if you have a mortgage, foreclosure, or have other canceled mortgage debt on their home.
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