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sandi65
New Member

How is the current mortgage payoff figured in the sale of a property when the original mortgage was less

 
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CathiM
New Member

How is the current mortgage payoff figured in the sale of a property when the original mortgage was less

The original mortgage doesn't factor into the calculation of the gain/loss. You might be able to exclude a gain. If you can exclude all of the gain, you don't need to report the sale on your tax return, unless you received a Form 1099-S, Proceeds From RealEstate Transactions.

The IRS has a provision that can help homeowners avoid capital gains on the sale of their primary residence.

 To qualify, you must have owned your home and used it as your main residence for at least two years in the five-year period before you sell it. You also must not have excluded another home from capital gains in the two-year period before the home sale. If you meet those rules, you can exclude up to $250,000 in gains from a home sale if you’re single and up to $500,000 if you’re married filing jointly.

If you can't exclude it, the amount of the proceeds from the sale of your home that you use to pay off the mortgage isn't a factor in figuring your taxable amount for the sale. 

Take any cash or other property you receive plus any of your indebtedness the buyer assumes or is otherwise paid off as part of the sale, less your selling expenses, less your adjusted basis in your home, you have a capital gain on the sale.

Your adjusted basis is generally your cost in acquiring your home plus the cost of any capital improvements you made, less casualty loss amounts and other decreases.

Don't report a loss, it isn't deductible. Click on this IRS link to read more: Property (Basis, Sale of Home, etc.) 3

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9 Replies
CathiM
New Member

How is the current mortgage payoff figured in the sale of a property when the original mortgage was less

Is this the sale of your primary residence or a rental property?
sandi65
New Member

How is the current mortgage payoff figured in the sale of a property when the original mortgage was less

personal residence
CathiM
New Member

How is the current mortgage payoff figured in the sale of a property when the original mortgage was less

The original mortgage doesn't factor into the calculation of the gain/loss. You might be able to exclude a gain. If you can exclude all of the gain, you don't need to report the sale on your tax return, unless you received a Form 1099-S, Proceeds From RealEstate Transactions.

The IRS has a provision that can help homeowners avoid capital gains on the sale of their primary residence.

 To qualify, you must have owned your home and used it as your main residence for at least two years in the five-year period before you sell it. You also must not have excluded another home from capital gains in the two-year period before the home sale. If you meet those rules, you can exclude up to $250,000 in gains from a home sale if you’re single and up to $500,000 if you’re married filing jointly.

If you can't exclude it, the amount of the proceeds from the sale of your home that you use to pay off the mortgage isn't a factor in figuring your taxable amount for the sale. 

Take any cash or other property you receive plus any of your indebtedness the buyer assumes or is otherwise paid off as part of the sale, less your selling expenses, less your adjusted basis in your home, you have a capital gain on the sale.

Your adjusted basis is generally your cost in acquiring your home plus the cost of any capital improvements you made, less casualty loss amounts and other decreases.

Don't report a loss, it isn't deductible. Click on this IRS link to read more: Property (Basis, Sale of Home, etc.) 3

View solution in original post

sandi65
New Member

How is the current mortgage payoff figured in the sale of a property when the original mortgage was less

Then why does Turbo Tax ask for the original sales price and purchase date instead of the current loan payoff
CathiM
New Member

How is the current mortgage payoff figured in the sale of a property when the original mortgage was less

Since the loan payoff isn't figured into the taxable gain, they don't keep track of the current loan payoff.  I hope you qualified for the exclusion!  Here is the IRS link where you can read more: <a rel="nofollow" target="_blank" href="https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home/property-basis-sale-of-home-etc/prope...>
GrMcMan57
Level 2

How is the current mortgage payoff figured in the sale of a property when the original mortgage was less

Sold a rental  for 9800.    Paid 80000 in2007,  where can I deduct mortgage payoff of $50000?  Is a sales expense?

GrMcMan57
Level 2

How is the current mortgage payoff figured in the sale of a property when the original mortgage was less

Rental of 12 yrs.  had lived in it 5 yrs but prior to 2007.

 

ThomasM125
Expert Alumni

How is the current mortgage payoff figured in the sale of a property when the original mortgage was less

The mortgage payoff is not deductible. You need to go to the rental section in TurboTax and edit the property and other assets you have set up for depreciation, and indicate that you disposed of the asset during the year. Then, you will assign a portion of the property sale to each asset.

 

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GrMcMan57
Level 2

How is the current mortgage payoff figured in the sale of a property when the original mortgage was less

This was my home 7 yrs -12/2001to12/232007...…...then yrs Rented 13yr until sold 3/2019

 Turbo seemed to take cost paid from sale price and stops there .....charging capital gains on that difference.'

Can i skip sale of asset in rental section to reporting sale of Home with part business use? 

 

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