Having a mortgage and building a new home is irrelevant to the sale. If you qualify for a full exclusion and did not receive a 1099-S, you don't have to report it.
New Home
If you are building a house
where you bought land and got a construction loan, you can deduct the interest
you paid on the construction loan and your property taxes.
Obviously, you can't live in a home while it's being built. Fortunately, the tax law
gives you a break here. So long as the home becomes your main home or second
home on the day it's ready for occupancy, you can deduct all the interest you
paid on the construction loan within 24 months before the home was complete.
If you are building a home with
a builder that does not charge you for the home until you close (an
"end" loan), then you cannot deduct anything (down payment, etc)
until you occupy the home.
If you meet the qualifications
to use the exclusion, any gain over that amount is a capital gain. The
exclusions are $250,000 for single, and $500,000 for married filing jointly.
See the rules below.
Does Your Home Sale Qualify for Maximum Exclusion
The tax code recognizes the importance
of home ownership by providing certain tax breaks when you sell your home. To
qualify for these breaks, your home must meet the Eligibility Test , which is explained later.
How your sale qualifies. 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.
