It depends.
If you sold your home and qualify for the home gain exclusion (the home capital gain rollover no longer exists, it was replaced by the home gain exclusion), then you will not have any reportable capital gains except if you took depreciation on your home due a home office deduction or it being a rental at some time in the past.
The IRS requires the
recognition of a capital gain on the recapture of previously taken depreciation
expenses (even if a person is claiming the home gain exclusion).
So according to the
IRS, when you sell a property that was used as a rental or taken a home office
expense and took a depreciation expense in a prior year, you must pay 25
percent recapture tax (also referred to as Section 1250 recapture) as well as
regular state income tax on the depreciation you claimed. (Remember the IRS
will assume that you claimed the correct amount of depreciation every year—this
is true regardless of whether you actually claimed any depreciation on your tax
return).
However, you do not need to enter the sale of your
primary residence if:
- You never used your primary
residence as a rental or took home office deduction
- You have a loss on the sale
of your home (Personal capital losses are not reported on your tax return)
- You did not receive a Form
1099-S and
- You meet the home gain
exclusion (see below)
You can take
the gain exclusion as long as you considered the home your "primary
residence" for 2 of the last 5 years. If you have a capital gain from
the sale of your main home, you may qualify to exclude up to $250,000 of that
gain from your income. You may qualify to exclude up to $500,000 of that gain
if you file a joint return with your spouse. See Sale of Your Home for more
information on the exclusion.
If you still need to enter your sale of your primary
residence, please follow these steps:
- Once you are in your tax
return (for TurboTax Online sign-in, click Here), click on the “Federal
Taxes” tab ("Personal" tab in TurboTax Home & Business)
- Next click on “Wages &
Income” ("Personal Income" in TurboTax Home & Business)
- Next click on “I’ll choose
what I work on”
- Scroll down the screen until
to come to the section “Less Common Income”
- Choose “Sale of Home (gain or
loss)” and select “start’
- You will want to use the
"Easy Guide" to determine the adjusted basis on this home
Say "yes"
that you sold your main home and TurboTax will guide you on entering this
information. You will need:
- The date you sold your home
and the selling price (from your closing statement)
- The date you bought your home
and the purchase price (from your closing statement)
- The cost of any major
improvements you made, so we can deduct them for you
- Form 1099-C if you sold your
home at a loss (short sale)
Just remember to
check the box to have your home sale reported on your tax return but ONLY if
you receive a 1099-S
