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TYLER2004
New Member

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

someone told us that as soon as we sell our home we have to do a capital gain form for taxes

 I thought you just did it on your next years return who is correct

32 Replies
vernyhutch
New Member

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

I sell my house last year in July 2016, do i have to include this in my tax
bwa
Alumni
Alumni

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

You need to report it on your 2016 tax return (prepared this year.)
bwa
Alumni
Alumni

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

If reported, it is reported for the tax return of the year of sale.  However, it may not even be reported.

For the sale of a residence, up to $250,000 ($500,000 on a joint return where you both lived in the residence) of gain can be excluded from income if you lived in and owned the house for two of the last five years.

(You may have a smaller exclusion if the property was used as a rental during the five year period, and you may have income from recapture of depreciation if you claimed an office in the home deduction for the home.)

If you work through the interview on sale of a residence, Turbotax will compute the exclusion. Look under the wages and income tab for less common income, then sale of home.

I would only report the sale if:

    The gain exceeds the amounts that are exempt from tax, or
    You received a Form 1099-S from the closing agent.

A closing agent can get an affidavit or statement from you that the sale meets the requirements for exclusion and, if so, not send a Form 1099-S reporting the sale.  If the gain is fully excludible and you don't get a Form 1099-S, there is no reason to report the sale on your tax return.


pinkjelly1234
New Member

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

Very helpful!!! Thank you so much!!

My question is house selling should be within 5 years of ownership to avoid a capital gain tax??

For example, if house is owned from 2011 to 2017( 6 years) and sold on 2017, is there a capital gain tax??

If house is owned for 5 years and owner lived for 2 years with 3 years rent-out (move in and out), is there a capital gain tax?
I heard someone and tax accountant say I'm eligible for non capital gain tax but other says different.

I would like to figure out if there is capital gain tax or not ...and how to calculate...

Home purchased May 2011
Lived until Nov 2012 (18 months)
Rented out Nov 2012 to Dec 1st 2015 ( 3 years)
Owner moves in on Dec 5th 2015 until house is sold

Loan amount $115,000
Remodeling $50,000
Agent fee 5-6% (don't know yet, average)
and what other fees or taxes in CA ??


My agent told me she can sell it within 2 months or possibly make to sell on May 2016 If needed for avoidance of capital gain...
She, agent doesn't know about this rule, but I see you point is that, If 1099-s is given, there is a capital gain tax and if not given, 0 capital gain tax...


Thank you for reading and looking forward to someone's answer....advice...
Opus 17
Level 15

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

[removed]
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Opus 17
Level 15

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

[removed]
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Opus 17
Level 15

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

One more thing (sorry!) in response to one of your followup questions, you don't lose the exclusion if you own the house longer than 5 years.  2 years ownership/2 years residency is the minimum, but you would certainly qualify if you lived there (as your main home) for as long as you want past the minimum.
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
pk
Level 12
Level 12

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

the five year window ( look-back period ) starts from the date of closing and as mentioned above during this  window, one of you ( you or your spouse, if married at the time of sale ) must have owned the prop for two years continously and both must have used the prop as your main home for a total of 730 days , in order to qualify for exlcusion of $250,000 of capital gain for each spouse ( if married ). The portion of the capital gain that is due to depreciations allowed , mut be first allocated to ordinary income and  taxed at your marginal rate.
Carl
Level 15

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

Opus 17, one more thing to point out so that it's clear. If, at any time, you have taken depreciation on the house, then no matter what, you WILL pay taxes on the recaptured depreciation. Recaptured depreciation is NOT excluded from taxation under any circumstances or scenario. So if the property was a rental, or you claimed a home office or business use of any part of the property, you have depreciation that you recapture on the sale, and pay tax on.
pk
Level 12
Level 12

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

this recapture is because depreciation allowed would have sheltered an equal amount ot ordinary income from taxes and thus , must now be recaptured. Agreed with Carl
re2boys
Level 9

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

And remember that the rule is "allowed or allowable"  depreciation. So if depreciation never claimed, but was allowed, you still must pay tax on the allowable depreciation recapture.
pinkjelly1234
New Member

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

I'm so impressive how you answer me!  I sincerely appreciate your kind and professional answer.

"Then on top of that, you will still probably pay some tax on the depreciation.  When you rented the house you were entitled to take depreciation, and when you sell you have to pay that back (pay a recapture tax) if you sell the house for more than the depreciated value.  "

-) I hired a rental manager and reported all taxable rental income during 3 years period. But If sold a house, I ought to pay this income again?
Opus 17
Level 15

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

No, you don't pay tax on the rental income.  But recapture is something different.  I have to go out now, I will try and explain later if no one else does.  

Also, my answer about excluding gain is probably wrong, and you will owe more tax than I thought.  Some of us are talking about it and we will get back to you.  Basically, the problem is that at some point, the IRS decided that if a taxpayer has a rental with a large capital gain, they should not be able to make it tax-free just by moving back in to it for 2 years before selling.  (The tax break was created for homeowners not landlords.)  So they made up some really complicated rules that I think are going to cause you a tax bite.  But we are trying to figure it out and will update you when ready.
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
pinkjelly1234
New Member

If you sell a house do you need to file a return for the capital gain or do it when I file taxes next year

"you don't lose the exclusion if you own the house longer than 5 years.  2 years ownership/2 years residency is the minimum"

-) I finally understand! I'm so glad you are a lifesaver of me! I have a tax accountant but he is not willing to answer me in detail. I would like to do myself if I can...(but I can't) or get other accountant. But it is not easy since he has all my papers and worked for 3 years...

** So, with this one, I see 2 years ownership and 2 years residency to avoid a capitals gain tax..
Doesn't matter house ownes over 3 years or 10 years! But 2 years residency is needed! 🙂
Ownership residency test is already passed!

"long term capital gain and is usually taxed at 15%, or would be tax-free if you sell after May 2016"
-) ok, then I will try to sell From June 2016 and close out within 30-60 days. (Closing will be June 31st  or July 31st 2016..l(hopefully, it works)
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