If you sell a home at a profit in today's market, you may not have to pay tax on the gain. It's important to know the rules, however, to determine if you must report the sale of your home and any gain from the sale.
As long as you meet certain qualifications, you may be able to exclude up to $250,000 in gain from selling your home. If you're married, you may be able to exclude up to $500,000 in gain.
When you sell your home, you may sign a form stating that you will not have a taxable gain on the sale of your home and for other information. If you sign this form, the closing agent may not send Form 1099-S Proceeds From Real Estate Transactions, which reports the sale to the IRS and to you.
If you do receive Form 1099-S, you must report the sale of your home on your tax return, even if you do not have to pay tax on any gain.
If you sell your house at a loss, it is considered a personal loss. You cannot take a deduction.
You must own the home longer than one year for the gain to qualify as a long-term capital gain.
Long-term capital gains tax rates for 2013 are 0%, 15%, or 20%, depending on your income tax bracket. Ordinary income tax rates for 2013 range from 10% to 39.6%.
High-income taxpayers must pay an additional 3.8% tax on net investment income, including any gain from the sale of a residence that is not excluded from income. For this purpose, a high-income taxpayer is a taxpayer with a modified adjusted gross income of more than $200,000 ($250,000 if married filing jointly, or $125,000 if married filing separately).
If you purchased the home in 2008, when you sell you generally must pay back any credit that you have not paid back already.
If you purchased the home in 2009 or 2010, and you sold the home or stopped living it before the end of 36 months, you may be required to pay back the credit.
You must pay back the smaller of these two amounts:
In either case, you may qualify for an exception to paying back the credit if you have no gain on the sale of the home or in certain other circumstances.
You can only exclude the gain from your main home. Your main home is the place you live most of the time.
If you have more than one home, your main home is generally the place you receive your mail, and the address you have on your identification and bills. You can also consider where you bank and where you are members of clubs and religious organizations to determine which house is your main home.
If your house went up in value when you were not living in it; for example, when you used the property as a rental house, you cannot exclude gain from the time you rented it out. For determining the amount of the gain you cannot exclude, the property is assumed to have gone up in value evenly over the period of time you owed it.
If you expect to sell another main home within two years, you may want to consider claiming the gain on sale of your current main home instead of excluding the gain. You can only claim an exclusion on the sale of your main home once every two years. Depending on your specific sale, it may be more beneficial to claim the current gain as income and use the exclusion on the future sale of your main home.
There are no longer any requirements to buy another home after you sell in order to exclude the gain from the sale of your home.
This is especially important if you are expecting correspondence from the IRS, such as a tax refund in the mail.
January 1 — Everyone
Federal Holiday (New Year's Day) Details
January 10 — Employees who work for tips
If you received $20 or more in tips during December, report them to your employer Details
January 15 — Individuals
Make a payment of your estimated tax for 2018 if you did not pay your income tax for the year through withholding (or did not pay in enough tax that way). Use Form 1040-ES Details
January 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in December 2018
January 15 — Farmers & fishermen
Pay your estimated tax for 2018 using Form 1040-ES Details
January 21 — Everyone
Federal Holiday (Martin Luther King, Jr. Day) Details
January 31 — All Employers
Give your employees their copies of Form W2 for 2018. If an employee agreed to receive Form W2 electronically, have it posted on a website and notify the employee of the posting.
January 31 — Individuals who must make estimated tax payments
If you did not pay your last installment of estimated tax by January 15, you may choose (but are not required) to file your income tax return (Form 1040) for 2017 by January 31. Filing your return and paying any tax due by January 31 prevents any penalty for late payment of the last installment. If you cannot file and pay your tax by January 31, file and pay your tax by April 15.
January 31 — Payers of gambling winnings
If you either paid reportable gambling winnings or withheld income tax from gambling winnings, give the winners their copies of Form W2G.
January 31 — Social Security, Medicare, and withheld income tax
File Form 941 for the fourth quarter of 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until 02-10 to file the return.
January 31 — Certain small employers
File Form 944 to report social security and Medicare taxes and withheld income tax for 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is $2,500 or more for 2018 but less than $2,500 for the fourth quarter, deposit any undeposited tax or pay it in full with a timely filed return. If you deposited the tax for the year timely, properly, and in full, you have until February 10 to file the return.
January 31 — Farm employers
File Form 943 to report social security and Medicare taxes and withheld income tax for 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year timely, properly, and in full, you have until February 10 to file the return.
January 31 — Federal unemployment tax
File Form 940 for 2018. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it is more than $500, you must deposit it. However, if you deposited the tax for the year timely, properly, and in full, you have until February 10 to file the return.
January 31 — All businesses
Give annual information statements to recipients of certain payments you made during 2018 Details