Deductions & credits

If you bought a house and sold a house, you will  enter the Sale of your Home by selecting the following:

• Federal
• Income
• Sale of Home under Less Common Income
• Walk through the steps to enter the sale

The purchase of your new home is not something reported to the IRS.  The sale of your home is.  

It doesn't matter that you used the money to buy a new house, the old sale still is considered one transaction and the new purchase is something else.

Keep all of your sales agreements and records for the new house, because if you sell it again, you will need to know the cost basis of your house so you can deduct what you paid for it, which will reduce your profit. 

Depending on the sales price, how long you lived there and your marital status, the sale may or may not be taxable income as you may qualify for the Home Sale Exclusion.

1. 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. 
2. 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