Schedule D for sale of primary residence?

[Anonymous]

I sold my primary residence in 2015, and met all the criteria for the profits to be tax-exempt. My understanding is that I therefore do not need to report the sale or income gained to the IRS. I have put this information into TurboTax, but it is still asking me to upgrade to another package to fill out a Schedule D. When I decline, the final confirmation message asks me if I'm sure I don't won't to fill out a Schedule D, and the response to decline reads "I did not sell my home last year." That statement is false, but I'm certain that I don't need to file this form. Do I need to file it, or is this just an unethical up-sell tactic by Intuit?

[PatriciaV]

No, you are not required to report the sale of your primary residence if you qualify and the gain is under the limit:

You can exclude up to $250,000 of gain if filing single, or $500,000 if you are Married Filing Jointly (MFJ) if:

• You owned the home;
• It was your main home for two years or more of the five year period ending on the sale date; and
• You did not exclude gain from the sale of another home during the two year period ending on the sale date.

To avoid upgrading, answer the question "no."

Also note:

In general, the sale of your main home is not taxable, but you may be required to report this transaction on your tax return for the year of the sale, whether you sell at a gain, or a loss (see below).

See: IRS Pub 523 Reporting Your Home Sale

"You need to report the gain if ANY of the following is true.

• You have taxable gain on your home sale (or on the residential portion of your property if you made separate calculations for home and business) and do not qualify to exclude.
• You received Form 1099-S. If so, you must report the sale even if you have no taxable gain to report.
• You wish to report your gain as taxable gain even though some or all of it is eligible for exclusion. You may wish to do this if, for example, you plan to sell another property that qualifies as a home within the next two years, and that property is likely to have a larger gain. If you choose to report, rather than exclude, your taxable gain, you can go back later and undo that choice by filing an amended return, but only within 3 calendar years after the year of sale.

If NONE of the three bullets above is true, you do not need to report your home sale on your tax return.

If you are required to report the sale of your home, see the instructions in this article: Is the money I made from a home sale taxable?

[2348]

What Form do I need to File for the Sale of My Home. I am Exempt from the tax and Capital Gains. 

[Hal_Al]

@2348  - Type> home sale <in the search box. Click on Jump to and then follow the interview.  TurboTax will put the sale on form 8949 with the home sale exclusion code, so that the gain is reported as 0.

[djchernicky]

I understand that income (or profit) from sale of primary residence (under $250,000) is not reported on tax return, however, can seller deduct expenses if the property was RENTAL six months before the sale?  It was our primary residence until 2018 when we moved and converted it to rental.

By expenses, I mean real estate taxes, commissions paid to real estate agents, utilities, improvements or modifications based on buyer's home inspection? Legal and title fees? i

I look forward to your reply. 

[DianeW777]

The sale is reported on the tax return and there will be taxable gain. 

There is more to the detail since this was a home and a rental property, even if you used the property as your home for 24 months of the five years immediately before the sale date.  For this reason you are not entitled to the full exclusion of gain because there is depreciation recapture required in your situation.

The Commissions, improvements/repairs made due to the home inspection are sales expenses.  The real estate taxes and utilities will be allowed for the amounts paid during the rental period in 2021 (no part of these expenses are a sales expense). If you itemize your deductions you can use any real estate taxes paid after the rental period.  If you do not itemize deductions then you will not use the remainder of the real estate taxes. The balance of utilities is not a deduction after the rental period.  

 Any depreciation allowed or allowable (during the months it was rented whether or not you took advantage of the deduction) during the rental period will be recaptured and will be taxable limited to the actual amount of gain on the sale.  

Carefully answer the questions in the asset section of the rental activity.  

1. Answer - No, I have not always used this item 100% of the time for this business.
2. Answer - No, Special Handling Required?
3. Begin to answer the questions about the Home Sale
4. TurboTax will do the rest once this has been completed

@djchernicky