Exemption for Primary sale of residence is not showing in Turbotax -- entirety of net proceeds is taxed.

[JGH55]

I sold my principal residence in 2025.  My husband and I have lived there exclusively since 1994.  We will be filing married-separate in 2025 but are also checking to see if married-joint is a better situation.  In either scenario, TurboTax does not provide a tax exclusion -  it indicates we are ineligible for an exclusion and taxes the entire amount of the net gain.   How can this be fixed?  

[xmasbaby0]

Do you have a 1099S?

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 Premium software to report the 1099-S

  TO ENTER THE SALE OF YOUR PRIMARY HOME

  1. Start with Federal 
  2. Click on Wages and Income 
  3. Select Choose what I work on
  4. Scroll down to Less Common Income
  5. On Sale of Home (gain or loss), 
  6. Click the start or update button

     NOTE:   If you have ever used the home as rental property or claimed a home office, you have more information to enter

[JGH55]

Thank you for the detailed response.  I have entered all of the information on the forms that TT asks for.  I am using the desktop version of home and business.  Yet TT shows I have no exemptions and also fully taxes the gain at the marginal tax rate, not the capital gains tax rate.  It seems there is a mistake and I’m not sure how to get the software corrected.  It is up to date.

[Vanessa A]

If it is taxing the entire amount and saying you are ineligible for the exclusion, it is likely due to the way you have answered one of the questions. You can go back through the questions and double check your answers.  If you do an all of your answers are correct, you can go to forms mode and look at the home sale worksheet.  Double check to be sure all the answers are correct here.  Then look at line 28 to see if there is a number on that line?  If you are filing separately it should be $250,000.