Exclusion on sale of main home by surviving spouse.(p104)
If you are an unmarried widow or widower on the date of sale, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. For more information, see Sale of main home by surviving spouse under Ownership and Use Tests, later.taxmap/pub17/p17-081.htm#en_us_publink10008013
Mortgage debt forgiveness.(p104)
You can exclude from gross income any discharge of qualified principal residence indebtedness. This exclusion applies to discharges made after 2006 and before 2013. Additionally, the basis of the principal residence (main home) must be reduced (but not below zero) by the amount excluded from gross income. For more information, see Discharges of qualified principal residence indebtedness, later, and Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment).taxmap/pub17/p17-081.htm#en_us_publink100051357
New rule for employees and volunteers of the Peace Corps.(p104)
If you or your spouse is an employee, enrolled volunteer, or volunteer leader of the Peace Corps, you may be able to exclude from income a gain from selling your main home, even if you did not live in it for 2 years during the 5-year period ending on the date of sale. Generally, you can elect to have the 5-year test period for ownership and use suspended (maximum of 10 years) during any period you or your spouse serves outside the United States (on qualified official extended duty if an employee). This provision applies to a sale of a main home after December 31, 2007, and is now included under a special rule that already allows similar benefits to members of the uniformed services or Foreign Service, or employees of the intelligence community. For more information, see Members of the uniformed service or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps, later.taxmap/pub17/p17-081.htm#en_us_publink100070305
First-time homebuyer credit.(p104)
If you bought a main home in the United States after April 8, 2008, and did not own a main home during the prior 3 years, you may be able to take the first-time homebuyer credit. See the instructions for Form 1040, line 69.taxmap/pub17/p17-081.htm#en_us_publink100073193
State and local general sales taxes.(p104)
The option to deduct state and local general sales taxes instead of state and local income taxes was extended through 2009. See the instructions for Schedule A (Form 1040), line 5.taxmap/pub17/p17-081.htm#en_us_publink100094888
Nonqualifed use of property used partly for business or rental.(p104)
Beginning with sales or exchanges of your main home after December 31, 2008, many of the rules discussed in Publication 523, Business Use or Rental of Home, will not apply. You will no longer be able to exclude gain allocated to periods of nonqualified use of the property. For information, see Publication 553, Highlights of 2008 Tax Changes. taxmap/pub17/p17-081.htm#en_us_publink100033372
Home sold with undeducted points.(p104)
If you have not deducted all the points you paid to secure a mortgage on your old home, you may be able to deduct the remaining points in the year of the sale. See Mortgage ending early
in chapter 23.
This chapter explains the tax rules that apply when you sell your main home. Generally, your main home is the one in which you live most of the time.
If you sold your main home in 2008, you may be able to exclude from income any gain up to a limit of $250,000 ($500,000 on a joint return in most cases). See Excluding the Gain
, later. 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 may also have to complete Form 4797, Sales of Business Property. See Reporting the Sale
If you have a loss on the sale, you cannot deduct it on your return. However, you may need to report it. See Reporting the Sale, later.
The following are main topics in this chapter.
- Figuring gain or loss.
- Excluding the gain.
- Ownership and use tests.
- Reporting the sale.
Other topics include the following.
- Business use or rental of home.
- Recapturing a federal mortgage subsidy.
You may want to see:
Publication 523 Selling Your Home 530 Tax Information for First-Time Homeowners 547 Casualties, Disasters, and Thefts Form (and Instructions) Schedule D (Form 1040) : Capital Gains and Losses 982: Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustments) 8828 : Recapture of Federal Mortgage Subsidytaxmap/pub17/p17-081.htm#en_us_publink100033373
This section explains the term "main home." Usually, the home you live in most of the time is your main home and can be a:
- Mobile home,
- Cooperative apartment, or
To exclude gain under the rules of this chapter, you generally must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. taxmap/pub17/p17-081.htm#en_us_publink100033374
If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. However, if you sell vacant land used as part of your main home and that is adjacent to it, you may be able to exclude the gain from the sale under certain circumstances. See Vacant land under Main Home in Publication 523 for more information.taxmap/pub17/p17-081.htm#en_us_publink100033375
You buy a piece of land and move your main home to it. Then you sell the land on which your main home was located. This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land.taxmap/pub17/p17-081.htm#en_us_publink100033376
If you have more than one home, you can exclude gain only from the sale of your main home. You must include in income gain from the sale of 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. taxmap/pub17/p17-081.htm#en_us_publink100033377
You own and live in a house in the city. You also own a beach house, which you use during summer months. The house in the city is your main home.taxmap/pub17/p17-081.htm#en_us_publink100033378
You own a house, but you live in another house that you rent. The rented house is your main home.taxmap/pub17/p17-081.htm#en_us_publink100033379
If you use only part of the property as your main home, the rules discussed in this chapter apply only to the gain or loss on the sale of that part of the property. For details, see Business Use or Rental of Home