How do I account for the sale of our home and purchase of a new home in 2020 (re: deducting property taxes?)??

[shell1250]

We sold our original home (had been there 5 years) and purchased a new home in 2020.  I am not sure how to input our property tax deduction for this year... I have the amount we actually paid in property taxes to the county (for our original home), the amount extra we paid to the buyers at closing when we sold that home (to cover the remaining portion of the year for property taxes) and the amount we received as a credit from the sellers of our new home when we purchased it.  But I'm not sure what to do with all of these numbers? Particularly as the amount we received in credit when we were buyers is higher than the amount we paid and the amount we credited our buyers combined...  I have both settlement statements from our purchase and sale, what do I do???

[DavidD66]

If you paid the taxes for the house you sold, then the buyer should have paid you at closing for their share of the taxes you had already paid.  The taxes you report for that house is the amount you paid, less the amount you received at closing.  If you did not pay the taxes for the year before closing, then you would have paid the buyer for your share at closing, and that would be your deductible amount for that house.  For the house you bought, if the taxes had not been paid at closing, then the seller would have paid you for their share of the taxes, and then you would have paid the entire tax bill.  Your deductible taxes for the house you bought, under that scenario would be the taxes you paid less what the seller paid you at closing. 

After determining the actual amount of property tax you paid, I would enter it as a single amount for your primary residence.

If you collected more for property tax than you paid out, then there must have been an error on one or both closing statements.

[shell1250]

Thanks for the reply! That must be how they do it in some states, not illinois. Illinois property taxes run a year behind- so we did pay our full property taxes in 2020, but it was for 2019. Then at closing we credited our buyers $6k to cover the portion of 2020 that we lived in the home, but that they will now have to pay as it comes due in 2021.  The sellers of our new home did the same thing, credited us $16k for their portion of the 2020 taxes that we will now have to pay in 2021.  The only difference is the tax rate, which means the credit we received for the new home is more than what we paid on the old home just because the taxes on the new home are that much higher. Does that make sense? I didn’t enter the sale of our home because we lived there more than 5 yrs, but now I’m not sure what to do?

[HelenC12]

If you received Form 1099-S for the sale of your home, enter it TurboTax. If you're filing status is Married Filing Jointly and your profit from the home sale is less than $500,000, you won't be taxed. To enter the 1099-S form, see Is the money I made from a home sale taxable? The entry instructions are in the FAQ.

• If you didn't receive form 1099-S, you don't have to enter your personal residence home sale.

Regarding your real estate taxes. You're a calendar year taxpayer (January 1 through December 31). You would enter what you actually paid during the calendar year. It doesn't matter what year the taxes are for so enter the amount you actually paid and the amount at closing. 

You do not net out the $16,000 that was paid to you by the seller. The $16,000 will be deducted from the amount you pay for the actual property taxes when the bill comes due.

• For example: in 2021, If your tax bill comes in at $20,000 for assessed year 2020, you pay the $20,000 but you must deduct the $16,000 since that was given to you by the buyer and not paid by you. Your 2021 tax return will show property taxes paid of $4,000. 

This FAQ explains it in greater detail: Can I claim property (real estate) taxes if I recently bought or sold my home?

[why23]

In 2020 I sold my primary residence that had owned for over 5 years and then purhase a more expensive

primary residence  in 202  so I believe there is no reason to reportit onmy taxes reporting for 2020.

Is this a true statement.

[Irene2805]

True.  If you qualify for the home sale exclusion, do not include the sale on your tax return (unless the sale was reported on a form 1099-S).

According to IRS Pub. 523 - Selling Your Home:

Your sale qualifies for exclusion of $250,000 gain ($500,000 if married filing jointly) if all of the following requirements are met:

• You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale.
• You didn’t acquire the home through a like-kind exchange (also known as a 1031 exchange), during the past 5 years.
• You didn’t claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude.

@why23

[Ksto]

If I sold my primary residence in 2020, received 1098 from mortage, what was paid off with the sale but states an mortgage principle still, do I put $0 in or what the 1098 says. i received a 1099S for the sale as it was for $535,000 (capital gains is far less as the remaining mortgage was removed) I received another 1098 from new mortgage company, but the new 1098 does not state the remaining priciple...do i just input that even though its not on the 1098?

every time i hit review to submit i have 1 error and brings me back to the new 1098 mortgage.

[Cedrick3755]

We bought a new home in Jan. 2021;  We sold our old home in April 2021.  What do I need to show concerning both of these transactions?

[DianeW777]

There is nothing to show or report for the home you purchased in January, 2021.  This information will be needed when and if you sell this home.

The home you sold would be a reportable tax event to show whether you are eligible for the home sale exclusion.  The ownership and use tests must be met.

1. You must have owned the home.
2. You must have used the home for 2 years of the immediate 5 years before the sale

TurboTax will show you if your home sale is taxable.

1. Open or continue your return in TurboTax
2. Search for home sale
3. Select the Jump to link in the search results
4. Answer Yes to Did you sell or have your home foreclosed in 2021? on the Sale of Your Main Home screen
5. Follow the instructions to enter your info

@Cedrick3755