Question regarding irc 121, form 1099-S

Forum|Forum|4 years ago
March 2, 2022
1 reply
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Just sold our home. We are asked to sign a form "Certification for no information" to see if 1099-S will be sent to the IRS. We bought our home for 5 years, lived as primary residence for 4 years, and rented one year prior to sale. We were expecting to utilize the 121 exclusions from capital gains tax, but this certification for no information form asks 7 questions, and one specifically asked if the property has ever been for "rental purposes", which it did. So will the title company generates 1099-S and we have to claim the 121 exception in next year's tax return?

AmeliesUncle

Level 15

Yes, and yes.

You will owe tax on the depreciation that you were able to claim, but the rest of the gain will be tax-free if the gain is less than the $250,000/$500,000 exclusion amount.

rvr350Author

Level 2

So in answering “yes” to being the property was used in rental purposes, even though 121 allows such exception to exist, the title company will report the sale.

What is the process in declaring 121 exclusion in filing taxes next year?

i thought the point in 121 exclusion was to prevent the issusance of 1099-S?

thanks.