So it sounds like she received a 1099-S as well since yours is reporting half of the gross proceeds. So you would need to issue the 1099-S for 25% or half of what you received.
When you are entering your portion for the sale, you would only deduct 25% of the fees and the house payoff. She would deduct the other 75% of the fees and payoff since she is getting 75% of the income. This allows the deductions to match the income.
In the end, if you lived in the house for at least 2 out of the last 5 years, it is not going to be taxable income as it will fall under the home sale exclusion.
- If you owned and lived in the home for 2 out of the last 5 years, then you may qualify for the home sale exclusion which would exclude up to $250k ($500k if married filing jointly) of the sale of your home. In order to qualify you must not have used the home sale exclusion in the past 2 years.
- If you do not qualify, the rest of your income will play a part in the tax rate. This would be a capital gains sale so your tax rate would be between 0% and 20%. The capital gains rates are as follows based on income
- Zero percent rate for the following income
- $44,625 for single or MFS
- $59,750 for HOH
- $89,250 for Married Filing Jointly
- Fifteen percent for income more than above but less than below
- $276,900 for MFS
- $492,300 for Single
- $523,050 for Head of Household
- $553,850 for Married Filing Jointly
- Twenty percent for the amount that your taxable income is over the 15% level.
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