Generally, the sale of your home is not taxable, but you are required to report the sale on your tax return for the year of the sale, whether you sell at a gain, or a loss.
If you have a gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may exclude up to $500,000 of that gain if you file a joint return with your spouse. See IRS Publication 523 for more information.
If you have a loss on the sale of your home, the loss is not deductible.
In recent years, the housing market has seen prices drop. If you sold your home for less than the amount of the mortgage, or received a Form 1099-C related to the cancellation of indebtedness on your home mortgage, see the discussion regarding a short sale below.
If you received a form 1099-A, see Form 1099-A, Acquisition or Abandonment of Secured Property.
Where do I report the sale of my home in TurboTax?
Don't worry! When you use TurboTax to prepare your taxes, we’ll ask you questions about the sale of your home, figure out how what needs to be reported, and fill in all the right forms for you.
If you've already gone through the step-by-step interview and want to jump directly to the entry screen for this topic, follow these directions.
- Select the Federal Taxes tab (the Personal tab in the Home & Business edition).
- Select the Wages & Income subtab, select Explore on My Own.
- Scroll down the Wages & Income screen until you see the Less Common Income group.
- Click on the Start/Update button to the right of the Sale of Home (gain or loss) category.
- Follow the prompts.
What is a short sale of my home?
A short sale of your home means a sale of your home for less than the balance on the mortgage.
Generally, if the remaining unpaid portion of your mortgage is cancelled after the sale, you will have cancellation of indebtedness income.
Under current tax rules, most taxpayers will qualify for a tax break when reporting cancellation of indebtedness income. For more information, see 1099-C Cancellation of Mortgage Debt.
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