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:
Also, to qualify for the exclusion, neither you nor your spouse had 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 Capital Gains and Losses, 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.
Per IRS Publication 523 Selling Your Home, on page 16:
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 Installment Sale Income.
To report the sale of your main home on an installment contract in the TaxAct program:
By completing this section, you are calculating:
For additional information, please review IRS Publication 537 Installment Sales.
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