A little good news doesn't hurt.


Tom Garrett 4 years, 2 months ago

Because I've been asked the same question by three different people lately, I thought I'd put this information up. I thought most people knew it, but I suppose it's like anything else, if you don't deal with it you don't know it.

The question has come from three people I talked to who were doing a "for sale by owner" sale of their homes. The question was whether or not you have to declare any gain in the sale on your income tax. Here's the answer, direct from the IRS web site:

Sale of Residence - Real Estate Tax Tips

You may qualify to exclude from your income all or part of any gain from the sale of your main home. Your main home is the one in which you live most of the time. Ownership and Use Tests

To claim the exclusion, you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have:

* 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 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).

* 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)


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
* Gain (or loss) on the sale
* Gain that you can exclude

Reporting the Sale

Do not report the sale of your main home on your tax return unless:

* 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.

If you need more information, or want to see the site yourself, here's a link:



Pat Randall 4 years, 2 months ago

Tom, Not to put you down, BUT I would go to a good tax person as new laws on income tax come out all the time. Two years ago a rule or law was changed just before income tax time and created a problem for me. Believe me the IRS can always find a way to get to you. When you sell your house your self or have a RE agent there are always costs that can be deducted. Have all the papers when you bought it and when you sold it in your hands whichever way you go. Doing it yourself or hiring a good tax person. This from someone who was a REALTOR from 1969 to 1993.


Tom Garrett 4 years, 2 months ago

Thanks, Pat.

I just wanted to let people know that they probably won't have to pay a nickel in income tax if the gain they made is less than $250,000 for someone filing singly, or $500,000 for someone filing jointly.

I've always let H&R Block do my taxes. Cheap, fast, easy and guaranteed.


Pat Randall 4 years, 2 months ago

Tom, What is guaranteed? Isn't there a place where you sign that all information is from tax payer and they are not responsible?


Tom Garrett 4 years, 2 months ago

Pat, obviously if you don't bring in the correct information they can't guarantee anything, but otherwise they do. They take legal responsibility. It's one reason I use them.


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