Mortgage buyout

[Shayla333]

How do I claim the mortgage buyout amount I received on my taxes? It's from a home that would of been considered my principal residence, so I don't think I owe taxes on the capital gains. 

[Vanessa A]

Capital gains depends on how long have you owned the home.  If you owned and lived in the home for 2 out of the last 5 years, then you may qualify for the home sale exclusion which would exclude up to $250k ($500k if married filing jointly) of the sale of your home.  In order to qualify you must not have used the home sale exclusion in the past 2 years. 

When entering your basis for the sale, you will split it based on your ownership.  So if 2 of you owned the property, then your basis will be 50% of the cost basis. 

To enter the Sale of a Home select the following:

• Federal
• Income
• Sale of Home under Less Common Income