topic In the same state, when you sell your home and purchase a new home for a higher price than the sale price, do you have to report this to the IRS? in Get your taxes done using TurboTax

In the same state, when you sell your home and purchase a new home for a higher price than the sale price, do you have to report this to the IRS?

m-spear — Wed, 18 Mar 2020 18:37:35 GMT

Re: In the same state, when you sell your home and purchase a new home for a higher price than the sale price, do you have to report this to the IRS?

xmasbaby0 — Wed, 18 Mar 2020 18:45:33 GMT

What you do with the money from selling a house in the United States --whatever state-- has been irrelevant to the IRS since 1997. Buying another house does not matter. It is about the gain from the sale.

SALE OF HOUSE

If your gain was more than $250,000 filing Single, or more than $500,000 filing Married Filing Jointly the sale must be reported on your tax return. Whether you re-invested the gain in to another house is irrelevant. If you have a Form 1099-S go to Federal>Wages and Income>Less Common Income>Sale of Home (gain or loss)

If you owned and lived in the home as your primary residence for at least 2 of the last 5 years on the date of the sale, you do not have to report the home sale if the gain is less than $250K filing Single, or less than $500K filing Married Filing Jointly (and you both owned and lived in the home for at least 2 years).

If you are using online TT, you need Premier or Self-Employed software to report the 1099-S
.https://ttlc.intuit.com/questions/1901135-i-sold-my-home-at-a-loss-is-this-deductible

Re: In the same state, when you sell your home and purchase a new home for a higher price than the sale price, do you have to report this to the IRS?

Opus 17 — Wed, 18 Mar 2020 18:51:03 GMT

The state doesn't matter and what you do with the money doesn't matter. You must pay tax on the capital gain from the sale, unless you qualify for the exclusion.

First, your gain is the difference between the selling price and your cost basis. You can reduce the selling price by costs of selling, such as the real estate commission you paid and any inspections or things that the seller is required to pay in your market. Your cost basis is what you originally paid, plus the cost of permanent improvements you might have made, minus any adjustments for business use, rental use, or casualty loss deductions.

Then, you can exclude from tax, the first $250,000 of your gain, or the first $500,000 if married filing jointly, if you lived in the home as your main home for at least 2 of the past 5 years, and you owned the home at least 2 years or more. If your gain is less than the exclusion, you don't have to report the sale unless the closing agent gave you a form 1099-S. If the gain is more than your exclusion, you report the sale, and pay tax on the non-excluded gain.

There are some special circumstances if you were forced to move in less than 2 years where you might get a partial exclusion.

How you spent the gain (such as buying a new house) does not affect the tax treatment of the sale. That was an old rule that was eliminated 20 years ago or more.