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Frequently Asked Tax Questions And Answers

I sold my primary residence this year. What form do I need to file? If you meet the ownership and use tests, you will generally only need to report the sale of your home if your gain is more than $250,000 ($500,000 if married filing a joint return).

This means that during the 5-year period ending on the date of the sale, you must have:
1. * Owned the home for at least 2 years (the ownership test), and
2. * Lived in the home as your main home for at least 2 years (the use test).

If you owned and lived in the property as your main home for less than 2 years, you may still be able to claim an exclusion in some cases. The maximum amount you can exclude will be reduced. If you are required to report a gain, it is reported on Form 1040, SCHEDULE D, Capital Gains and Losses.

References:

  1. * * Publication 523, Selling Your Home
  2. * * Tax Topic 701, Sale of your home - after May 6, 1997
  3. * * Tax Topic 703, Basis of assets

Frequently Asked Tax Questions And Answers

If I sell my home and use the money I receive to pay off the mortgage, do I have to pay taxes on that money?

It is not the money you receive for the sale of your home, but the amount of gain on the sale over your cost, or basis, that determines whether you will have to include any proceeds as taxable income on your return. You may be able to exclude any gain from income up to a limit of $250,000 ($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.

*All information is accurate and reliable to the best of my knowledge but you should always consult your "Tax Advisor" or the IRS with any questions or irregularities before filing a return. For additional information on selling your home, refer to Publication 523, Selling Your Home.

If you have questions about the sale of your principal residence, e-mail me at jp@julieparrishrealty.com

Contact Us www.julieparrishrealty.com
919.489.9694 229 Forestwood Dr. Durham, NC. 27707