Do we report the gain from the sale of our principal residence with seller financing to a family member if we qualified for the exemption and did not receive a 1099-S?

[user5402612781]

The family member does not live in the home.  Turbo Tax does not allow me to use the excluded gain on line 15 of Form 6252.

[Phillip1 · Accepted solution]

No, you would not report the gain on your return if you qualified for a full exclusion and there was no 1099-S issued by the title company after the sale.

If the loan is financed by you (the family member financing the loan will have mortgage interest) you would need to report the interest income from the mortgage each year.

[user5402612781]

Why then will Turbo Tax not add the exclusion on line 15 of Form 6252?

[DSMizerak]

Purchased Turbo Tax Premier for TY 2021.  Filled out form 6252 for installation sale of resident home which occurred in May of 2021.  Do not see where Turbo Tax ask for $250K exemption of sale of residence.  Complete Turbo Tax and it shows long term capital gain of $78, when there should be no loss and no gain if Turbo tax allowed me to submit exemption.

[DSMizerak]

Addendum to past post.   I think there might be a program bug / error with my case with current Turbo Tax Premier for 2021.  One of the questions in form 6252 asks if the residence home sold is the "buyer's primary home"   which is not, so I did not mark the box in question.  This put me down a different program path that did not allow me to add amount  up to the $250K exemption.  Turbo Tax then flags (8)  Federal errors in final review of data.    I can then manually override form 6252 to update the $250K exemption amount to get a net "zero" capital gain on this installation sale.  Net result Turbo Tax now printout shows Schedule "D" with net gain of zero; update to Schedule B seller finance mortgage interest information from form 6252  and does not print form 6252.      Schedule B has a second abnomality / bug that does not round interest nor dividend values but gives full dollar and cents amounts.

[MarilynG1]

To qualify for the Gain Exclusion on the home sale, you need to report the sale in the 'Sale of Home' section.

TurboTax asks about time you lived in the home during the last five years to qualify for the exclusion. 

This will calculate the Exclusion Amount on the Home Sale Worksheet (Part IV, Line 37) and enter it on Form 6252, Line 15.

Click this link for more info on Reporting a Home Sale.