Top 10 Tax Tips If You Sold Your Home in 2014Published:
Did you know? If you sell your home and you make a profit, the gain might not be taxable. That’s just one of the many tax facts to keep in mind when you’re selling a home.
Here are 10 important tax tips you should know if you sell your home:
Tax Tip #1:
If you have a capital gain from the sale of your home, you may be eligible to exclude your gain from tax. This rule generally applies if you owned and used the property as your main residence for at least 2 out of the 5 years before the date of sale. (See Tax Tip #2 for more information.)
Tax Tip #2:
There are some exceptions when it comes to the rules governing the ownership and use of your home. Certain exceptions apply to persons with disabilities, as well as military personnel and some government and Peace Corps workers. See IRS Publication 523, Selling Your Home, for details.
Tax Tip #3:
You can exclude up to a $250,000 gain from the sale of your home (or up to $500,000 if you’re married filing jointly). Note that the Net Investment Income Tax will not apply to your excluded gain.
Tax Tip #4:
If the gain from selling your home is not taxable, you may not be required to report it on your Federal tax return. (See Tax Tip #5 for more information.)
Tax Tip #5:
If you cannot exclude all or part of the gain, you must report the home sale to the IRS on your tax return. Even if you choose not to claim the exclusion, you are required to report the sale on your tax return. This is also true if you get IRS Form 1099-S, Proceeds From Real Estate Transactions. If you report the home sale to the IRS, it’s a good idea to read through the Q&A on the Net Investment Income Tax.
Tax Tip #6:
In general, you are only allowed to exclude the gain from the sale of your main home once every 2 years.
Tax Tip #7:
If you own more than 1 home, you can only exclude the gain from the sale of your main home. Your “main home” is the home that you live in the majority of the time.
Tax Tip #8:
If you claimed the First-Time Homebuyer Tax Credit when you bought the home, there are special rules that apply to the sale. See IRS Publication 523 for details about those rules.
Tax Tip #9:
If you sell your main home at a loss, you cannot deduct it on your Federal tax return.
Tax Tip #10:
After you sell your home and move elsewhere, make sure to update your address with the IRS. You can do this by filing IRS Form 8822, Change of Address.
BONUS TIP: The Premium Tax Credit
If you receive an advance payment for the Premium Tax Credit in 2014, you must report certain changes in your circumstances (such as changes to your income or family size) to the Health Insurance Marketplace. Advance payments of the Premium Tax Credit are designed to help you pay for the insurance that you buy through the Marketplace. You should notify the Marketplace if you move out of the region that’s covered by your current Marketplace plan. Reporting such changes will help ensure that you receive the proper type and amount of financial assistance, so you can avoid getting too little or too much in advance.
If you haven’t filed your 2014 taxes, use E-file to prepare and file your Federal tax return. The tax software will do most of the hard work for you. If you choose to file a paper tax return, you can use the Worksheets in IRS Publication 523 to help you.
For additional information about the sale of a home, refer to IRS Publication 523. You can call 800-TAX-FORM (800-829-3676) to order the publication by mail.