Tax on sale of home when owned by two unmarried people

[rutledj]

My daughter and her friend purchased a home in 7/2019  and sold if in 3/2021 (less than two years).  They each received a 1099-S form. How do you enter the information in TurboTax so one person isn't getting taxed on all the gain (24k)?

[HelenC12]

If the total gain on the sale of the home is $24k and each 1099-S form is reporting $24K, they should request a corrected 1099-S form to reflect the 50/50 split or $12K each. 

Note: They may be eligible for a partial exclusion of gain if the move is work related. Per IRS: Page 6: You meet the requirements for a partial exclusion if any of the following events occurred during your time of ownership and residence in the home.

• You took or were transferred to a new job in a work location at least 50 miles farther from the home than your old work location. For example, your old work location was 15 miles from the home and your new work location is 65 miles from the home.
• You had no previous work location and you began a new job at least 50 miles from the home. • Either of the above is true of your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence.

If the 1099-S was for the sale of their main home, here's how to enter the form:

1. Open or continue your return, if you haven't already
2. Locate the Search bar in the upper right of your screen. Search for sale of home and select the Jump to link in the search results
3. Answer Yes to Did you sell or have your home foreclosed in 2021?
4. Enter the address of the home you sold on the next screen, and Continue
5. On the next screen, answer Yes to Did you receive a Form 1099-S that reported this sale? and enter the info from your 1099-S
6. On the next screens, follow the on-screen instructions to continue entering the info from your 1099-S

Profits of up to $250,000 ($500,000 on a joint return) on the sale of your home may not be taxable if it was your primary residence for two of the last five years. We’ll ask you some questions about the sale of your home to see if you qualify.

Sale of other real estate:

If the 1099-S form wasn’t for the sale of their main home, select an option below for step-by-step instructions:

• Sale of a second home, an inherited home, or land
• Sale of a rental property

[rutledj]

Thanks for the reply. The 1095-s form states the selling price and also a line that says (If multiple sellers - Request is hereby made that you allocate the sales price among the sellers as follows: 137,000 to each.)

Does that change what I'm entering in the form?

[LeonardS]

Your daughter and her friend would each use $137,000 as it is stated on the 1099-S when they enter the sale information for the home into their tax return.  Because the 1099-S already has a notation for two sellers it is not necessary to request a corrected 1099-S.

[rutledj]

If that’s the case, when entering the cost basis, would that also be halved ( 117500 instead of 235000)?

[Vanessa A]

Yes, you would need to split the cost basis of the house in half since they are each getting half of the profit.  So, yes, each person would have a cost basis of $117,500.