home sales 1099 % of sales price to each spouse

[cantercancan]

I purchased a house before being married, then a few years later got married and am now selling the house. My husband and I file jointly so I think we can take advantage of the $500K capital gains exclusion. My question is does it matter how we divide the gross sales price between us on a 1099 form that the escrow company sends to the IRS? For instance, can 100% of the sales price be applied to me and 0% to my husband and we still take advantage of the married filing jointly capital gains exclusion? This home is in WA if that matters. Thank you for any guidance!

[DoninGA · Accepted solution]

If your spouse is also on the deed along with yourself, the Form 1099-S will be issued in both of your names.  If you are the only one on the deed then it will be issued in your name.

If you are filing a joint tax return, it does not matter whose name is on the Form 1099-S to be eligible for the exclusion if you both have lived in the home for at least two years.

If you sold your primary personal residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).

Gain or Loss = Sales Price minus Sales Expenses minus Adjusted Basis (Purchase Price plus the cost of improvements prior to the sale)

If you had a gain greater then the exclusion amounts then you would have to report the sale. Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported.

[Opus 17]

Marriage qualifies as ownership for your spouse even if you did not put their name on the deed.  However, they must physically live in the home at least two years -- marriage imparts ownership but the residency has to be separately established.

Then, you don't "split" the gain in any particular way.  If you file a joint return, you report the sale of one property one time for one amount,,and claim one exclusion of $500,000.   If the broker wants to issue a 1099-S (sometimes you can sign a waiver if it your personal home) it doesn't matter if the broker issues a single 1099-S to you for the full amount or two forms for half the amount each.  (It might matter if you were not filing jointly.)