The GOOD NEWS:
If you sell your primary residence and the GAIN from the sale is NOT more than $250,000 (or $500,000 if married-filing-joint) then you may be able to exclude all or part of the gain from your income.
As always, there are tests and exceptions to determine if you qualify for any exclusions.
- You must pass the “ownership and use” test. For the 5-year period ending on the date of the sale, you must have owned and lived in the home as your primary residence for at least two years.
- If all or part of the gain is not excludable or If you receive form 1099S – Proceeds from Real Estate Transactions – or you choose not to claim the exclusion, then you must report the sale of the home on your tax return.
- If you sell your “2nd Home” (i.e. vacation property) you MUST report the gain as it IS NOT excludable.
There are exceptions to the rules including, but not limited to, those with disabilities and certain members of the military.
The BAD NEWS:
If you have a LOSS on the sale of your primary residence, or your 2nd home (i.e. vacation property) it is NOT deductible.
For more information, or if you have any questions at all, please contact us here at Thomas M DiTullio Accounting.
AVOID SCAMS – The IRS will not initiate contact with you via social media or text.