Home sale with 2 owners

[brunnerpd]

I purchased a home 5 years ago with a partner. The house is homesteaded in the state of Florida. If the profits of the sale are under $250k, and all profits will be allocated to their bank account through the sale of the property. Thus showing that I will not be making any profit, am I required to report anything on my standard yearly taxes?

[AR_CPA2]

Hello Brunnerpd,

You are not required to report the sale of home if your profit is under $250K and you lived there for atleast two of the last five years. 

But, if you received a Form 1099-S for the sale proceeds, you must report the sale of the home in the year that it was sold to the IRS on your tax return. In TurboTax:

1) Select Wage & Income Section

2) Select at the bottom the Less Common Income 

3) Select Sell of Home (Gain or Loss)

If you were a co-owner with a partner, you will split the basis of the property, as well as the proceeds.   

Hope this helps.

[brunnerpd]

Home is not sold yet, but preparing for when we do sell it.

Ballparking numbers. Purchase was for $400k. A second mortgage was taken for improvements for an additional $75k. And the anticipated sale will be in the $600k range.

I was just curious when a home is "homesteaded" is that for the house itself, or the individual or individuals who sell it? Meaning. We owned it for over 5 years, profits will be less than $250k, so the homestead will be in effect, but my partner will be the one collecting the profits, as opposed to splitting the profits.

[brunnerpd]

Ok, I'm a bit confused. I'm not sure exactly what the verbage is, but I have been told by multiple accountants that when a home in Florida is homestead, and lived in for over 2 years, the first $250k is not taxable for an individual. Like I said, I dont know how that relates to a homestead rebate, which I understand is different. But either way, I'm 99.9999% sure that unless the profits are over $250k, their will not be capital gains on it.

[brunnerpd]

Got it, Yes that makes sense now.

We plan on having an agreement written up showing net profits to be given to my partner. Not sure if it will be 100% or not. My partner has lived in the house full time for 5 years, but I have not. My hope is there will be no issue when issuing the profits to them, showing a small percentage to me.

TY!!