Please review the following information to properly report the installment sale of your main home. Main Home Qualifications:
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). 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 2 years (the ownership test) and
- Lived in the home as your main home for at least 2 years (the use test).
Also, to qualify for the exclusion, neither you nor your spouse excluded a gain from the sale of another home during the 2-year period ending on the date of the sale.
According to the IRS Instructions for Schedule D
, if you sold or exchanged your main home, do not report it on your tax return unless your gain exceeds your exclusion amount. Any gain you cannot exclude is taxable and should be reported on Schedule D (Form 1040). You cannot deduct a loss from the sale of your main home. Reporting the Installment Sale:
Per IRS Publication 523
, page 17: Determine whether your home sale is an installment sale.
If you finance the buyer's purchase of your home (you hold a note, mortgage, or other financial agreement), you probably have an installment sale. You may be able to report any non-excludable gain on an installment basis. Use Form 6252, Installment Sale Income, to report the sale.
For more information, see Pub. 537, Installment Sales
Enter your exclusion on Line 15 of Form 6252. How to Enter the Installment Sale into the TaxAct Program:
To report the sale of your main home on an installment contract, please use the following navigation steps.
- From within your TaxAct return (Online or Desktop), click on the Federal tab. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal
- Click Investment Income to expand the category and then click Payments received from an Installment Sale
- Click on Add to create a new copy of the form or Review to review a form already created
- The program will proceed with the interview questions for you to enter or review the appropriate information
By completing this section, you are calculating:
- The gain or loss on the sale of your main home,
- If a gain, how much will be excluded,
- Total gross profit from sale (Form 6252, Line 16), and
- Any installment sale income for current year (Form 6252, Line 26), which will be included with the amount on Form 1040, Line 13.
For additional information about Installment Sales, please review IRS Publication 537 Installment Sales