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Federal Tax Forms

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Federal Tax Forms

Federal tax forms Index Symbols 403(b) plans Defined, Tax-sheltered annuity plan. Federal tax forms Loans from, without tax consequences, Exception for qualified plan, 403(b) plan, and government plan loans. Federal tax forms Simplified Method to be used, Who must use the Simplified Method. Federal tax forms 5% owners, 5% owners. Federal tax forms A Age 70, Age 70½. Federal tax forms Alimony (see Qualified domestic relations orders (QDROs)) Annuities 5% rate on early distributions, 5% rate on certain early distributions from deferred annuity contracts. Federal tax forms Defined, Annuity. Federal tax forms Fixed-period, Fixed-period annuities. Federal tax forms , Fixed-period annuity. Federal tax forms Guaranteed payments, Guaranteed payments. Federal tax forms Joint and survivor annuities, Joint and survivor annuities. Federal tax forms Minimum distributions from, Minimum distributions from an annuity plan. Federal tax forms Payments under, Annuity payments. Federal tax forms Qualified plan annuity starting before November 19, 1996, Qualified plan annuity starting before November 19, 1996. Federal tax forms Rollovers, Annuity contracts. Federal tax forms (see also Rollovers) Single-life, Annuities for a single life. Federal tax forms , Single-life annuity. Federal tax forms Starting date of, Annuity starting date defined. Federal tax forms , Who must use the Simplified Method. Federal tax forms , Annuity starting before November 19, 1996. Federal tax forms , Annuity starting date. Federal tax forms Before November 19, 1996, Annuity starting before November 19, 1996. Federal tax forms Distribution on or after, Distribution On or After Annuity Starting Date Transfers of contracts, Transfers of Annuity Contracts Types of, Types of pensions and annuities. Federal tax forms Variable annuities, Variable annuities. Federal tax forms , Variable Annuities, Death benefits. Federal tax forms Assistance (see Tax help) B Beneficiaries, Survivors and Beneficiaries C Capital gains Lump-sum distributions, Capital Gain Treatment Cash withdrawals (see Nonperiodic payments) Child support (see Qualified domestic relations orders (QDROs)) Corrective distributions of excess plan contributions, Corrective distributions of excess plan contributions. Federal tax forms Costs Investment in the contract, Cost (Investment in the Contract) Lump-sum distribution, determination for, Cost. Federal tax forms D Death benefits, Death benefits. Federal tax forms Death of employee, Distributions after the employee's death. Federal tax forms , Survivors of employees. Federal tax forms Death of retiree, Survivors of retirees. Federal tax forms Deductible voluntary employee contributions, Deductible voluntary employee contributions. Federal tax forms Defined contribution plans, Defined contribution plan. Federal tax forms Designated Roth accounts Costs, Designated Roth accounts. Federal tax forms Defined, Designated Roth account. Federal tax forms Qualified distributions, Designated Roth accounts. Federal tax forms Rollovers, Designated Roth accounts. Federal tax forms Disability pensions, Disability pensions. Federal tax forms , Disability Pensions Distributions, Examples (see also Rollovers) Beginning date for, Required beginning date. Federal tax forms Early distributions and penalty tax, Payment to you option. Federal tax forms , Tax on Early Distributions Employer securities, Distributions of employer securities. Federal tax forms Loans treated as, Loans Treated as Distributions Lump-sum, Distributions of employer securities. Federal tax forms , Lump-Sum Distributions, Examples Minimum required, Recapture tax for changes in distribution method under equal payment exception. Federal tax forms Nonperiodic, taxation of, Taxation of Nonperiodic Payments Periodic, taxation of, Taxation of Periodic Payments Public safety employees, Qualified public safety employees. Federal tax forms Qualified reservist, Qualified reservist distributions. Federal tax forms U. Federal tax forms S. Federal tax forms savings bonds, Distribution of U. Federal tax forms S. Federal tax forms savings bonds. Federal tax forms Dividends, Taxation of Nonperiodic Payments E Early withdrawal from deferred interest account Penalty tax on, Payment to you option. Federal tax forms , Tax on Early Distributions Employer securities, distributions of, Distributions of employer securities. Federal tax forms Estate tax, Reduction for federal estate tax. Federal tax forms Deduction, Estate tax deduction. Federal tax forms Estimated tax, Estimated tax. Federal tax forms Excess accumulation, tax on, Recapture tax for changes in distribution method under equal payment exception. Federal tax forms Excess plan contributions, corrective distributions of, Corrective distributions of excess plan contributions. Federal tax forms F Figuring taxable amount, Figuring the Taxable Amount, Distribution of U. Federal tax forms S. Federal tax forms savings bonds. Federal tax forms Fixed-period annuities, Fixed-period annuities. Federal tax forms , Fixed-period annuity. Federal tax forms Foreign employment contributions, Foreign employment contributions. Federal tax forms Form 4972, Lump-Sum Distributions W-4P, Choosing no withholding. Federal tax forms Form 1040/1040A Rollovers, How to report. Federal tax forms Form 1040X Changing your mind on lump-sum treatment, Changing your mind. Federal tax forms Form 1099-INT U. Federal tax forms S. Federal tax forms savings bonds distributions, Distribution of U. Federal tax forms S. Federal tax forms savings bonds. Federal tax forms Form 1099-R 10-year tax option for lump-sum distribution, 10-Year Tax Option Corrected form, Introduction Corrective distributions of excess plan contributions, Corrective distributions of excess plan contributions. Federal tax forms Exceptions to tax, Exceptions to tax. Federal tax forms Investment in the contract, Cost (Investment in the Contract) Loan treated as distribution from plan, Reporting by plan. Federal tax forms Rollovers, How to report. Federal tax forms Tax-free exchanges, Tax-free exchange reported on Form 1099-R. Federal tax forms Form 4972 10-year tax option for lump-sum distribution, 10-Year Tax Option Lump-sum distributions, Lump-Sum Distributions, Electing optional lump-sum treatment. Federal tax forms Form 5329 Recapture tax, Recapture tax for changes in distribution method under equal payment exception. Federal tax forms Special additional taxes (penalty taxes), Special Additional Taxes, Exceptions to tax. Federal tax forms Form RRB-1099-R, Form RRB-1099-R. Federal tax forms Form W-4P Withholding from retirement plan payments, Choosing no withholding. Federal tax forms , Nonperiodic distributions. Federal tax forms Form W-4V Voluntary withholding request for social security or railroad retirement benefits, Withholding Tax and Estimated Tax Free tax services, Free help with your tax return. Federal tax forms Frozen deposits, Frozen deposits. Federal tax forms Fully taxable payments, Fully Taxable Payments G General Rule, Partly Taxable Payments, General Rule Death of retiree under, Survivors of retirees. Federal tax forms Investment in the contract, determination of, Cost (Investment in the Contract) Guaranteed payments, Guaranteed payments. Federal tax forms H Help (see Tax help) Home purchase Loans from qualified plans for, Exception for qualified plan, 403(b) plan, and government plan loans. Federal tax forms I In-plan Roth rollovers, In-plan Roth rollovers. Federal tax forms Individual retirement accounts Minimum distributions from, Minimum distributions from an individual account plan. Federal tax forms Rollovers, Rollovers (see also Rollovers) Interest deduction Denial on loan from plan, Denial of interest deduction. Federal tax forms J Joint and survivor annuities, Joint and survivor annuities. Federal tax forms L Loans treated as distributions, Loans Treated as Distributions Local government employees Section 457 plans, Section 457 Deferred Compensation Plans Losses Lump-sum distribution, Losses. Federal tax forms Lump-sum distributions, Distributions of employer securities. Federal tax forms , Lump-Sum Distributions, Examples 10-year tax option, 10-Year Tax Option Capital gain treatment, Capital Gain Treatment Defined, Lump-Sum Distributions Election of, Changing your mind. Federal tax forms Form 4972, Lump-Sum Distributions M Minimum required distributions, Recapture tax for changes in distribution method under equal payment exception. Federal tax forms Missing children, photographs of, Reminders Multiple annuitants, Multiple annuitants. Federal tax forms Multiple-lives annuities, Multiple-lives annuity. Federal tax forms N Net Investment Income Tax, Net investment income tax. Federal tax forms , Distribution Before Annuity Starting Date From a Nonqualified Plan Net unrealized appreciation (NUA), Net unrealized appreciation (NUA). Federal tax forms Deferring tax on, Distributions of employer securities. Federal tax forms Nonperiodic payments Loan treated as, Loans Treated as Distributions Taxation of, Taxation of Nonperiodic Payments Nonqualified plans Distribution before annuity start date, Distribution Before Annuity Starting Date From a Nonqualified Plan General Rule to be used, Who must use the General Rule. Federal tax forms Loans treated as distributions from, Effect on investment in the contract. Federal tax forms Nonresident aliens Railroad retirement, Nonresident aliens. Federal tax forms P Partial rollovers, Partial rollovers. Federal tax forms Partly taxable payments, Partly Taxable Payments Penalty taxes Early distributions, Tax on Early Distributions Excess accumulation, Tax on Excess Accumulation Pensions Defined, Pension. Federal tax forms Disability pensions, Disability pensions. Federal tax forms , Disability Pensions Types of, Types of pensions and annuities. Federal tax forms Periodic payments Taxation of, Taxation of Periodic Payments Withholding tax, Periodic payments. Federal tax forms Public safety officers insurance premiums, Insurance Premiums for Retired Public Safety Officers Public school employees Tax-sheltered annuity plans for (see 403(b) plans) Publications (see Tax help) Q Qualified domestic relations orders (QDROs), Qualified domestic relations order (QDRO). Federal tax forms , Qualified domestic relations order (QDRO). Federal tax forms Alternate payee under and lump-sum distribution, Alternate payee under qualified domestic relations order. Federal tax forms Qualified employee annuities Defined, Qualified employee annuity. Federal tax forms Simplified Method to be used, Who must use the Simplified Method. Federal tax forms Qualified employee plans Defined, Qualified employee plan. Federal tax forms Simplified Method to be used, Who must use the Simplified Method. Federal tax forms Qualified plans, Who must use the General Rule. Federal tax forms (see also specific type of plan ) Distribution before annuity starting date, Distribution Before Annuity Starting Date From a Qualified Plan General Rule, Who must use the General Rule. Federal tax forms Loans from, without tax consequences, Exception for qualified plan, 403(b) plan, and government plan loans. Federal tax forms Rollovers, Qualified retirement plan. Federal tax forms Qualified settlement income Exxon Valdez litigation settlement, Qualified settlement income. Federal tax forms R Railroad retirement benefits, Railroad Retirement Benefits, Repayment of benefits received in an earlier year. Federal tax forms Taxability of, Withholding Tax and Estimated Tax Recapture tax Changes in distribution method, Recapture tax for changes in distribution method under equal payment exception. Federal tax forms Reemployment, Reemployment. Federal tax forms Related employers and related plans, Related employers and related plans. Federal tax forms Repayment of loan within 5 years, Exception for qualified plan, 403(b) plan, and government plan loans. Federal tax forms Required beginning date, Required beginning date. Federal tax forms Required distributions, minimum, Recapture tax for changes in distribution method under equal payment exception. Federal tax forms Retirement bonds, Retirement bonds. Federal tax forms Rollovers, Rollovers, Choosing the right option. Federal tax forms 20% tax rate on distribution, Eligible rollover distribution. Federal tax forms Comparison of direct payment vs. Federal tax forms direct rollover (Table 1), Choosing the right option. Federal tax forms Direct rollover to another qualified plan, Eligible rollover distribution. Federal tax forms , Direct rollover option. Federal tax forms In-plan Roth, In-plan Roth rollovers. Federal tax forms Nonspouse beneficiary, Rollovers by nonspouse beneficiary. Federal tax forms Nontaxable amounts, Rollover of nontaxable amounts. Federal tax forms Notice to recipients of eligible rollover distribution, Written explanation to recipients. Federal tax forms Property and cash distributed, Property and cash distributed. Federal tax forms Roth IRAs, Rollovers to Roth IRAs. Federal tax forms Substitution of other property, Rollovers of property. Federal tax forms Surviving spouse making, Rollover by surviving spouse. Federal tax forms S Section 457 deferred compensation plans, Section 457 Deferred Compensation Plans Securities of employer, distributions of, Distributions of employer securities. Federal tax forms Self-employed persons' rollovers, Rollovers Simplified Method, Partly Taxable Payments, Simplified Method Death of retiree under, Survivors of retirees. Federal tax forms How to use, How to use the Simplified Method. Federal tax forms Investment in the contract, determination of, Cost (Investment in the Contract) Not allowed, Who cannot use the Simplified Method. Federal tax forms Single-sum in connection with start of payments, Single-sum in connection with the start of annuity payments. Federal tax forms Single-life annuities, Annuities for a single life. Federal tax forms , Single-life annuity. Federal tax forms Social security, tax on, Withholding Tax and Estimated Tax State employees Section 457 plans, Section 457 Deferred Compensation Plans State insurer delinquency proceedings, State insurer delinquency proceedings. Federal tax forms Surviving spouse Distribution rules for, Distributions after the employee's death. Federal tax forms Rollovers by, Rollover by surviving spouse. Federal tax forms T Tables Comparison of direct payment vs. Federal tax forms direct rollover (Table 1), Choosing the right option. Federal tax forms Tax help, How To Get Tax Help Tax-free exchanges, Tax-free exchange. Federal tax forms Ten percent tax for early withdrawal, Payment to you option. Federal tax forms , Tax on Early Distributions Ten-year tax option, 10-Year Tax Option Time for making rollover, Time for making rollover. Federal tax forms Transfers of annuity contracts, Transfers of Annuity Contracts TTY/TDD information, How To Get Tax Help U U. Federal tax forms S. Federal tax forms savings bonds Distribution of, Distribution of U. Federal tax forms S. Federal tax forms savings bonds. Federal tax forms V Variable annuities, Variable annuities. Federal tax forms , Variable Annuities Voluntary employee contributions, Deductible voluntary employee contributions. Federal tax forms W Withdrawals, Withdrawals. Federal tax forms Employees withdrawing contributions, Plans that permitted withdrawal of employee contributions. Federal tax forms Withholding, Withholding Tax and Estimated Tax 10% rate used, Nonperiodic distributions. Federal tax forms 20% of eligible rollover, Withholding requirements. Federal tax forms , Payment to you option. Federal tax forms , 20% Mandatory withholding. Federal tax forms Periodic payments, Periodic payments. Federal tax forms Railroad retirement, Tax withholding. Federal tax forms Worksheets Simplified Method, How to use the Simplified Method. Federal tax forms Worksheet A, illustrated, Worksheet A. Federal tax forms Simplified Method Worksheet for Bill Smith Worksheet A, Simplified Method, Worksheet A. Federal tax forms Simplified Method Prev  Up     Home   More Online Publications
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IRS Opens Online FATCA Registration System

IR-2013-69, Aug. 19, 2013

WASHINGTON — The Internal Revenue Service today announced the opening of a new online registration system for financial institutions that need to register with the IRS under the Foreign Account Tax Compliance Act (FATCA).

Financial institutions that must register with the IRS to meet their FATCA obligations can now begin the process of registering by creating an account and providing required information. Financial institutions will also be able to provide required information for their branches of operation and other members of their expanded affiliate groups in which the financial institution is the lead organization.

The registration system, designed to enable secure account management, is a web-based application with around-the-clock availability.

Within a secure environment, the new registration system enables financial institutions to:

  • establish online accounts;
  • customize home pages to manage accounts;
  • designate points of contact to handle registrations;
  • oversee member and/or branch information; and
  • receive automatic notifications of status changes.

Financial institutions are encouraged to become familiar with the system, create their online accounts and begin submitting their information. Starting in January 2014, financial institutions will be expected to finalize their registration information by logging into their accounts, making any necessary changes and submitting the information as final.

As registrations are finalized and approved in 2014, registering financial institutions will receive a notice of registration acceptance and will be issued a global intermediary identification number.

The IRS will electronically post the first IRS Foreign Financial Institution (FFI) List in June 2014, and will update the list monthly. To ensure inclusion in the June 2014 IRS FFI List, financial institutions will need to finalize their registrations by April 25, 2014. 

Access to the FATCA registration system and related support information can be found on the FATCA page of IRS.gov.

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Page Last Reviewed or Updated: 04-Sep-2013

The Federal Tax Forms

Federal tax forms 15. Federal tax forms   Selling Your Home Table of Contents Reminder Introduction Useful Items - You may want to see: Main Home Figuring Gain or LossSelling Price Amount Realized Adjusted Basis Amount of Gain or Loss Dispositions Other Than Sales Determining Basis Excluding the GainMaximum Exclusion Ownership and Use Tests Reduced Maximum Exclusion Business Use or Rental of Home Reporting the SaleSeller-financed mortgage. Federal tax forms More information. Federal tax forms Special SituationsException for sales to related persons. Federal tax forms Recapturing (Paying Back) a Federal Mortgage Subsidy Reminder Home sold with undeducted points. Federal tax forms  If you have not deducted all the points you paid to secure a mortgage on your old home, you may be able to deduct the remaining points in the year of the sale. Federal tax forms See Mortgage ending early under Points in chapter 23. Federal tax forms Introduction This chapter explains the tax rules that apply when you sell your main home. Federal tax forms In most cases, your main home is the one in which you live most of the time. Federal tax forms If you sold your main home in 2013, you may be able to exclude from income any gain up to a limit of $250,000 ($500,000 on a joint return in most cases). Federal tax forms See Excluding the Gain , later. Federal tax forms Generally, if you can exclude all the gain, you do not need to report the sale on your tax return. Federal tax forms If you have gain that cannot be excluded, it is taxable. Federal tax forms Report it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040). Federal tax forms You may also have to complete Form 4797, Sales of Business Property. Federal tax forms See Reporting the Sale , later. Federal tax forms If you have a loss on the sale, you generally cannot deduct it on your return. Federal tax forms However, you may need to report it. Federal tax forms See Reporting the Sale , later. Federal tax forms The following are main topics in this chapter. Federal tax forms Figuring gain or loss. Federal tax forms Basis. Federal tax forms Excluding the gain. Federal tax forms Ownership and use tests. Federal tax forms Reporting the sale. Federal tax forms Other topics include the following. Federal tax forms Business use or rental of home. Federal tax forms Recapturing a federal mortgage subsidy. Federal tax forms Useful Items - You may want to see: Publication 523 Selling Your Home 530 Tax Information for Homeowners 547 Casualties, Disasters, and Thefts Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 982 Reduction of Tax Attributes Due to Discharge of Indebtedness 8828 Recapture of Federal Mortgage Subsidy 8949 Sales and Other Dispositions of Capital Assets Main Home This section explains the term “main home. Federal tax forms ” Usually, the home you live in most of the time is your main home and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. Federal tax forms To exclude gain under the rules of this chapter, you in most cases must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. Federal tax forms Land. Federal tax forms   If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. Federal tax forms However, if you sell vacant land used as part of your main home and that is adjacent to it, you may be able to exclude the gain from the sale under certain circumstances. Federal tax forms See Vacant land under Main Home in Publication 523 for more information. Federal tax forms Example. Federal tax forms You buy a piece of land and move your main home to it. Federal tax forms Then you sell the land on which your main home was located. Federal tax forms This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. Federal tax forms More than one home. Federal tax forms   If you have more than one home, you can exclude gain only from the sale of your main home. Federal tax forms You must include in income gain from the sale of any other home. Federal tax forms If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time during the year. Federal tax forms Example 1. Federal tax forms You own two homes, one in New York and one in Florida. Federal tax forms From 2009 through 2013, you live in the New York home for 7 months and in the Florida residence for 5 months of each year. Federal tax forms In the absence of facts and circumstances indicating otherwise, the New York home is your main home. Federal tax forms You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. Federal tax forms Example 2. Federal tax forms You own a house, but you live in another house that you rent. Federal tax forms The rented house is your main home. Federal tax forms Example 3. Federal tax forms You own two homes, one in Virginia and one in New Hampshire. Federal tax forms In 2009 and 2010, you lived in the Virginia home. Federal tax forms In 2011 and 2012, you lived in the New Hampshire home. Federal tax forms In 2013, you lived again in the Virginia home. Federal tax forms Your main home in 2009, 2010, and 2013 is the Virginia home. Federal tax forms Your main home in 2011 and 2012 is the New Hampshire home. Federal tax forms You would be eligible to exclude gain from the sale of either home (but not both) in 2013. Federal tax forms Property used partly as your main home. Federal tax forms   If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. Federal tax forms For details, see Business Use or Rental of Home , later. Federal tax forms Figuring Gain or Loss To figure the gain or loss on the sale of your main home, you must know the selling price, the amount realized, and the adjusted basis. Federal tax forms Subtract the adjusted basis from the amount realized to get your gain or loss. Federal tax forms     Selling price     − Selling expenses       Amount realized       Amount realized     − Adjusted basis       Gain or loss   Selling Price The selling price is the total amount you receive for your home. Federal tax forms It includes money and the fair market value of any other property or any other services you receive and all notes, mortgages or other debts assumed by the buyer as part of the sale. Federal tax forms Payment by employer. Federal tax forms   You may have to sell your home because of a job transfer. Federal tax forms If your employer pays you for a loss on the sale or for your selling expenses, do not include the payment as part of the selling price. Federal tax forms Your employer will include it as wages in box 1 of your Form W-2, and you will include it in your income on Form 1040, line 7. Federal tax forms Option to buy. Federal tax forms   If you grant an option to buy your home and the option is exercised, add the amount you receive for the option to the selling price of your home. Federal tax forms If the option is not exercised, you must report the amount as ordinary income in the year the option expires. Federal tax forms Report this amount on Form 1040, line 21. Federal tax forms Form 1099-S. Federal tax forms   If you received Form 1099-S, Proceeds From Real Estate Transactions, box 2 (Gross proceeds) should show the total amount you received for your home. Federal tax forms   However, box 2 will not include the fair market value of any services or property other than cash or notes you received or will receive. Federal tax forms Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. Federal tax forms Amount Realized The amount realized is the selling price minus selling expenses. Federal tax forms Selling expenses. Federal tax forms   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. Federal tax forms ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. Federal tax forms This adjusted basis must be determined before you can figure gain or loss on the sale of your home. Federal tax forms For information on how to figure your home's adjusted basis, see Determining Basis , later. Federal tax forms Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. Federal tax forms Gain on sale. Federal tax forms   If the amount realized is more than the adjusted basis, the difference is a gain and, except for any part you can exclude, in most cases is taxable. Federal tax forms Loss on sale. Federal tax forms   If the amount realized is less than the adjusted basis, the difference is a loss. Federal tax forms A loss on the sale of your main home cannot be deducted. Federal tax forms Jointly owned home. Federal tax forms   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. Federal tax forms Separate returns. Federal tax forms   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. Federal tax forms Your ownership interest is generally determined by state law. Federal tax forms Joint owners not married. Federal tax forms   If you and a joint owner other than your spouse sell your jointly owned home, each of you must figure your own gain or loss according to your ownership interest in the home. Federal tax forms Each of you applies the rules discussed in this chapter on an individual basis. Federal tax forms Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. Federal tax forms Foreclosure or repossession. Federal tax forms   If your home was foreclosed on or repossessed, you have a disposition. Federal tax forms See Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments, to determine if you have ordinary income, gain, or loss. Federal tax forms Abandonment. Federal tax forms   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. Federal tax forms Trading (exchanging) homes. Federal tax forms   If you trade your old home for another home, treat the trade as a sale and a purchase. Federal tax forms Example. Federal tax forms You owned and lived in a home with an adjusted basis of $41,000. Federal tax forms A real estate dealer accepted your old home as a trade-in and allowed you $50,000 toward a new home priced at $80,000. Federal tax forms This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 – $41,000). Federal tax forms If the dealer had allowed you $27,000 and assumed your unpaid mortgage of $23,000 on your old home, your sales price would still be $50,000 (the $27,000 trade-in allowed plus the $23,000 mortgage assumed). Federal tax forms Transfer to spouse. Federal tax forms   If you transfer your home to your spouse or you transfer it to your former spouse incident to your divorce, you in most cases have no gain or loss. Federal tax forms This is true even if you receive cash or other consideration for the home. Federal tax forms As a result, the rules in this chapter do not apply. Federal tax forms More information. Federal tax forms   If you need more information, see Transfer to spouse in Publication 523 and Property Settlements in Publication 504, Divorced or Separated Individuals. Federal tax forms Involuntary conversion. Federal tax forms   You have a disposition when your home is destroyed or condemned and you receive other property or money in payment, such as insurance or a condemnation award. Federal tax forms This is treated as a sale and you may be able to exclude all or part of any gain from the destruction or condemnation of your home, as explained later under Special Situations . Federal tax forms Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. Federal tax forms Your basis in your home is determined by how you got the home. Federal tax forms Generally, your basis is its cost if you bought it or built it. Federal tax forms If you got it in some other way (inheritance, gift, etc. Federal tax forms ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. Federal tax forms While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. Federal tax forms The result of these adjustments is your home's adjusted basis, which is used to figure gain or loss on the sale of your home. Federal tax forms See Adjusted Basis , later. Federal tax forms You can find more information on basis and adjusted basis in chapter 13 of this publication and in Publication 523. Federal tax forms Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. Federal tax forms Purchase. Federal tax forms   If you bought your home, your basis is its cost to you. Federal tax forms This includes the purchase price and certain settlement or closing costs. Federal tax forms In most cases, your purchase price includes your down payment and any debt, such as a first or second mortgage or notes you gave the seller in payment for the home. Federal tax forms If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed in Publication 523. Federal tax forms Settlement fees or closing costs. Federal tax forms   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. Federal tax forms You can include in your basis some of the settlement fees and closing costs you paid for buying the home, but not the fees and costs for getting a mortgage loan. Federal tax forms A fee paid for buying the home is any fee you would have had to pay even if you paid cash for the home (that is, without the need for financing). Federal tax forms    Chapter 13 lists some of the settlement fees and closing costs that you can include in the basis of property, including your home. Federal tax forms It also lists some settlement costs that cannot be included in basis. Federal tax forms   Also see Publication 523 for additional items and a discussion of basis other than cost. Federal tax forms Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. Federal tax forms To figure your adjusted basis, you can use Worksheet 1 in Publication 523. Federal tax forms Do not use Worksheet 1 if you acquired an interest in your home from a decedent who died in 2010 and whose executor filed Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent. Federal tax forms Increases to basis. Federal tax forms   These include the following. Federal tax forms Additions and other improvements that have a useful life of more than 1 year. Federal tax forms Special assessments for local improvements. Federal tax forms Amounts you spent after a casualty to restore damaged property. Federal tax forms Improvements. Federal tax forms   These add to the value of your home, prolong its useful life, or adapt it to new uses. Federal tax forms You add the cost of additions and other improvements to the basis of your property. Federal tax forms   For example, putting a recreation room or another bathroom in your unfinished basement, putting up a new fence, putting in new plumbing or wiring, putting on a new roof, or paving your unpaved driveway are improvements. Federal tax forms An addition to your house, such as a new deck, a sunroom, or a new garage, is also an improvement. Federal tax forms Repairs. Federal tax forms   These maintain your home in good condition but do not add to its value or prolong its life. Federal tax forms You do not add their cost to the basis of your property. Federal tax forms   Examples of repairs include repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes. Federal tax forms Decreases to basis. Federal tax forms   These include the following. Federal tax forms Discharge of qualified principal residence indebtedness that was excluded from income. Federal tax forms Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. Federal tax forms For details, see Publication 4681. Federal tax forms Gain you postponed from the sale of a previous home before May 7, 1997. Federal tax forms Deductible casualty losses. Federal tax forms Insurance payments you received or expect to receive for casualty losses. Federal tax forms Payments you received for granting an easement or right-of-way. Federal tax forms Depreciation allowed or allowable if you used your home for business or rental purposes. Federal tax forms Energy-related credits allowed for expenditures made on the residence. Federal tax forms (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. Federal tax forms ) Adoption credit you claimed for improvements added to the basis of your home. Federal tax forms Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. Federal tax forms Energy conservation subsidy excluded from your gross income because you received it (directly or indirectly) from a public utility after 1992 to buy or install any energy conservation measure. Federal tax forms An energy conservation measure is an installation or modification primarily designed either to reduce consumption of electricity or natural gas or to improve the management of energy demand for a home. Federal tax forms District of Columbia first-time homebuyer credit (allowed on the purchase of a principal residence in the District of Columbia beginning on August 5, 1997 and before January 1, 2012). Federal tax forms General sales taxes (allowed beginning 2004 and ending before 2014) claimed as an itemized deduction on Schedule A (Form 1040) that were imposed on the purchase of personal property, such as a houseboat used as your home or a mobile home. Federal tax forms Discharges of qualified principal residence indebtedness. Federal tax forms   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. Federal tax forms This exclusion applies to discharges made after 2006 and before 2014. Federal tax forms If you choose to exclude this income, you must reduce (but not below zero) the basis of the principal residence by the amount excluded from your gross income. Federal tax forms   File Form 982 with your tax return. Federal tax forms See the form's instructions for detailed information. Federal tax forms Recordkeeping. Federal tax forms You should keep records to prove your home's adjusted basis. Federal tax forms Ordinarily, you must keep records for 3 years after the due date for filing your return for the tax year in which you sold your home. Federal tax forms But if you sold a home before May 7, 1997, and postponed tax on any gain, the basis of that home affects the basis of the new home you bought. Federal tax forms Keep records proving the basis of both homes as long as they are needed for tax purposes. Federal tax forms The records you should keep include: Proof of the home's purchase price and purchase expenses, Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis, Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain, Any Form 982 you filed to report any discharge of qualified principal residence indebtedness, Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997, and Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations. Federal tax forms Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. Federal tax forms This means that, if you qualify, you will not have to pay tax on the gain up to the limit described under Maximum Exclusion , next. Federal tax forms To qualify, you must meet the ownership and use tests described later. Federal tax forms You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. Federal tax forms You can use Worksheet 2 in Publication 523 to figure the amount of your exclusion and your taxable gain, if any. Federal tax forms If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. Federal tax forms See Publication 505, Tax Withholding and Estimated Tax. Federal tax forms Maximum Exclusion You can exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. Federal tax forms You meet the ownership test. Federal tax forms You meet the use test. Federal tax forms During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Federal tax forms For details on gain allocated to periods of nonqualified use, see Periods of nonqualified use , later. Federal tax forms You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . Federal tax forms Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Federal tax forms This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). Federal tax forms Exception. Federal tax forms   If you owned and lived in the property as your main home for less than 2 years, you can still claim an exclusion in some cases. Federal tax forms However, the maximum amount you may be able to exclude will be reduced. Federal tax forms See Reduced Maximum Exclusion , later. Federal tax forms Example 1—home owned and occupied for at least 2 years. Federal tax forms Mya bought and moved into her main home in September 2011. Federal tax forms She sold the home at a gain in October 2013. Federal tax forms During the 5-year period ending on the date of sale in October 2013, she owned and lived in the home for more than 2 years. Federal tax forms She meets the ownership and use tests. Federal tax forms Example 2—ownership test met but use test not met. Federal tax forms Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. Federal tax forms He later sold the home for a gain. Federal tax forms He owned the home during the entire 5-year period ending on the date of sale. Federal tax forms He meets the ownership test but not the use test. Federal tax forms He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). Federal tax forms Period of Ownership and Use The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time. Federal tax forms You meet the tests if you can show that you owned and lived in the property as your main home for either 24 full months or 730 days (365 × 2) during the 5-year period ending on the date of sale. Federal tax forms Temporary absence. Federal tax forms   Short temporary absences for vacations or other seasonal absences, even if you rent out the property during the absences, are counted as periods of use. Federal tax forms The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. Federal tax forms Example 1. Federal tax forms David Johnson, who is single, bought and moved into his home on February 1, 2011. Federal tax forms Each year during 2011 and 2012, David left his home for a 2-month summer vacation. Federal tax forms David sold the house on March 1, 2013. Federal tax forms Although the total time David used his home is less than 2 years (21 months), he meets the requirement and may exclude gain. Federal tax forms The 2-month vacations are short temporary absences and are counted as periods of use in determining whether David used the home for the required 2 years. Federal tax forms Example 2. Federal tax forms Professor Paul Beard, who is single, bought and moved into a house on August 18, 2010. Federal tax forms He lived in it as his main home continuously until January 5, 2012, when he went abroad for a 1-year sabbatical leave. Federal tax forms On February 6, 2013, 1 month after returning from the leave, Paul sold the house at a gain. Federal tax forms Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. Federal tax forms He cannot exclude any part of his gain, because he did not use the residence for the required 2 years. Federal tax forms Ownership and use tests met at different times. Federal tax forms   You can meet the ownership and use tests during different 2-year periods. Federal tax forms However, you must meet both tests during the 5-year period ending on the date of the sale. Federal tax forms Example. Federal tax forms Beginning in 2002, Helen Jones lived in a rented apartment. Federal tax forms The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. Federal tax forms In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. Federal tax forms On July 12, 2013, while still living in her daughter's home, she sold her condominium. Federal tax forms Helen can exclude gain on the sale of her condominium because she met the ownership and use tests during the 5-year period from July 13, 2008, to July 12, 2013, the date she sold the condominium. Federal tax forms She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). Federal tax forms She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). Federal tax forms The time Helen lived in her daughter's home during the 5-year period can be counted toward her period of ownership, and the time she lived in her rented apartment during the 5-year period can be counted toward her period of use. Federal tax forms Cooperative apartment. Federal tax forms   If you sold stock as a tenant-stockholder in a cooperative housing corporation, the ownership and use tests are met if, during the 5-year period ending on the date of sale, you: Owned the stock for at least 2 years, and Lived in the house or apartment that the stock entitles you to occupy as your main home for at least 2 years. Federal tax forms Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. Federal tax forms Exception for individuals with a disability. Federal tax forms   There is an exception to the use test if: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year during the 5-year period before the sale of your home. Federal tax forms Under this exception, you are considered to live in your home during any time within the 5-year period that you own the home and live in a facility (including a nursing home) licensed by a state or political subdivision to care for persons in your condition. Federal tax forms If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. Federal tax forms Previous home destroyed or condemned. Federal tax forms   For the ownership and use tests, you add the time you owned and lived in a previous home that was destroyed or condemned to the time you owned and lived in the replacement home on whose sale you wish to exclude gain. Federal tax forms This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home. Federal tax forms Otherwise, you must have owned and lived in the same home for 2 of the 5 years before the sale to qualify for the exclusion. Federal tax forms Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Federal tax forms   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on “qualified official extended duty” as a member of the uniformed services or Foreign Service of the United States, or as an employee of the intelligence community. Federal tax forms You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve outside the United States either as an employee of the Peace Corps on "qualified official extended duty" or as an enrolled volunteer or volunteer leader of the Peace Corps. Federal tax forms This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. Federal tax forms   If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain. Federal tax forms For more information about the suspension of the 5-year test period, see Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps in Publication 523. Federal tax forms Married Persons If you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use tests, you can exclude up to $250,000 of the gain. Federal tax forms (But see Special rules for joint returns , next. Federal tax forms ) Special rules for joint returns. Federal tax forms   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Federal tax forms You are married and file a joint return for the year. Federal tax forms Either you or your spouse meets the ownership test. Federal tax forms Both you and your spouse meet the use test. Federal tax forms During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home. Federal tax forms If either spouse does not satisfy all these requirements, the maximum exclusion that can be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. Federal tax forms For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. Federal tax forms Example 1—one spouse sells a home. Federal tax forms Emily sells her home in June 2013 for a gain of $300,000. Federal tax forms She marries Jamie later in the year. Federal tax forms She meets the ownership and use tests, but Jamie does not. Federal tax forms Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. Federal tax forms The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. Federal tax forms Example 2—each spouse sells a home. Federal tax forms The facts are the same as in Example 1 except that Jamie also sells a home in 2013 for a gain of $200,000 before he marries Emily. Federal tax forms He meets the ownership and use tests on his home, but Emily does not. Federal tax forms Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. Federal tax forms However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. Federal tax forms Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. Federal tax forms The $500,000 maximum exclusion for certain joint returns does not apply because Emily and Jamie do not both meet the use test for the same home. Federal tax forms Sale of main home by surviving spouse. Federal tax forms   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. Federal tax forms   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. Federal tax forms The sale or exchange took place after 2008. Federal tax forms The sale or exchange took place no more than 2 years after the date of death of your spouse. Federal tax forms You have not remarried. Federal tax forms You and your spouse met the use test at the time of your spouse's death. Federal tax forms You or your spouse met the ownership test at the time of your spouse's death. Federal tax forms Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. Federal tax forms Example. Federal tax forms   Harry owned and used a house as his main home since 2009. Federal tax forms Harry and Wilma married on July 1, 2013, and from that date they use Harry's house as their main home. Federal tax forms Harry died on August 15, 2013, and Wilma inherited the property. Federal tax forms Wilma sold the property on September 3, 2013, at which time she had not remarried. Federal tax forms Although Wilma owned and used the house for less than 2 years, Wilma is considered to have satisfied the ownership and use tests because her period of ownership and use includes the period that Harry owned and used the property before death. Federal tax forms Home transferred from spouse. Federal tax forms   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. Federal tax forms Use of home after divorce. Federal tax forms   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. Federal tax forms Reduced Maximum Exclusion If you fail to meet the requirements to qualify for the $250,000 or $500,000 exclusion, you may still qualify for a reduced exclusion. Federal tax forms This applies to those who: Fail to meet the ownership and use tests, or Have used the exclusion within 2 years of selling their current home. Federal tax forms In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. Federal tax forms A change in place of employment. Federal tax forms Health. Federal tax forms Unforeseen circumstances. Federal tax forms Unforeseen circumstances. Federal tax forms   The sale of your main home is because of an unforeseen circumstance if your primary reason for the sale is the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home. Federal tax forms   See Publication 523 for more information and to use Worksheet 3 to figure your reduced maximum exclusion. Federal tax forms Business Use or Rental of Home You may be able to exclude gain from the sale of a home you have used for business or to produce rental income. Federal tax forms But you must meet the ownership and use tests. Federal tax forms Periods of nonqualified use. Federal tax forms   In most cases, gain from the sale or exchange of your main home will not qualify for the exclusion to the extent that the gains are allocated to periods of nonqualified use. Federal tax forms Nonqualified use is any period after 2008 during which neither you nor your spouse (or your former spouse) used the property as a main home with the following exceptions. Federal tax forms Exceptions. Federal tax forms   A period of nonqualified use does not include: Any portion of the 5-year period ending on the date of the sale or exchange after the last date you (or your spouse) use the property as a main home; Any period (not to exceed an aggregate period of 10 years) during which you (or your spouse) are serving on qualified official extended duty: As a member of the uniformed services; As a member of the Foreign Service of the United States; or As an employee of the intelligence community; and Any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the IRS. Federal tax forms The gain resulting from the sale of the property is allocated between qualified and nonqualified use periods based on the amount of time the property was held for qualified and nonqualified use. Federal tax forms Gain from the sale or exchange of a main home allocable to periods of qualified use will continue to qualify for the exclusion for the sale of your main home. Federal tax forms Gain from the sale or exchange of property allocable to nonqualified use will not qualify for the exclusion. Federal tax forms Calculation. Federal tax forms   To figure the portion of the gain allocated to the period of nonqualified use, multiply the gain by the following fraction:   Total nonqualified use during the period of ownership after 2008      Total period of ownership     This calculation can be found in Worksheet 2, line 10, in Publication 523. Federal tax forms Example 1. Federal tax forms On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. Federal tax forms She moved in on that date and lived in it until May 31, 2009, when she moved out of the house and put it up for rent. Federal tax forms The house was rented from June 1, 2009, to March 31, 2011. Federal tax forms Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. Federal tax forms Amy moved back into the house on April 1, 2011, and lived there until she sold it on January 31, 2013, for a gain of $200,000. Federal tax forms During the 5-year period ending on the date of the sale (January 31, 2008-January 31, 2013), Amy owned and lived in the house for more than 2 years as shown in the following table. Federal tax forms Five Year Period Used as  Home Used as  Rental 1/31/08 – 5/31/09 16 months       6/1/09 – 3/31/11   22 months 4/1/11 – 1/31/13 22 months         38 months 22 months During the period Amy owned the house (2,080 days), her period of nonqualified use was 668 days. Federal tax forms Amy divides 668 by 2,080 and obtains a decimal (rounded to at least three decimal places) of 0. Federal tax forms 321. Federal tax forms To figure her gain attributable to the period of nonqualified use, she multiplies $190,000 (the gain not attributable to the $10,000 depreciation deduction) by 0. Federal tax forms 321. Federal tax forms Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain. Federal tax forms Example 2. Federal tax forms William owned and used a house as his main home from 2007 through 2010. Federal tax forms On January 1, 2011, he moved to another state. Federal tax forms He rented his house from that date until April 30, 2013, when he sold it. Federal tax forms During the 5-year period ending on the date of sale (May 1, 2008-April 30, 2013), William owned and lived in the house for more than 2 years. Federal tax forms He must report the sale on Form 4797 because it was rental property at the time of sale. Federal tax forms Because the period of nonqualified use does not include any part of the 5-year period after the last date William lived in the house, he has no period of nonqualified use. Federal tax forms Because he met the ownership and use tests, he can exclude gain up to $250,000. Federal tax forms However, he cannot exclude the part of the gain equal to the depreciation he claimed or could have claimed for renting the house, as explained next. Federal tax forms Depreciation after May 6, 1997. Federal tax forms   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. Federal tax forms If you can show by adequate records or other evidence that the depreciation allowed was less than the amount allowable, then you may limit the amount of gain recognized to the depreciation allowed. Federal tax forms See Publication 544 for more information. Federal tax forms Property used partly for business or rental. Federal tax forms   If you used property partly as a home and partly for business or to produce rental income, see Publication 523. Federal tax forms Reporting the Sale Do not report the 2013 sale of your main home on your tax return unless: You have a gain and do not qualify to exclude all of it, You have a gain and choose not to exclude it, or You received Form 1099-S. Federal tax forms If any of these conditions apply, report the entire gain or loss. Federal tax forms For details on how to report the gain or loss, see the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949. Federal tax forms If you used the home for business or to produce rental income, you may have to use Form 4797 to report the sale of the business or rental part (or the sale of the entire property if used entirely for business or rental). Federal tax forms See Business Use or Rental of Home in Publication 523 and the Instructions for Form 4797. Federal tax forms Installment sale. Federal tax forms    Some sales are made under arrangements that provide for part or all of the selling price to be paid in a later year. Federal tax forms These sales are called “installment sales. Federal tax forms ” If you finance the buyer's purchase of your home yourself instead of having the buyer get a loan or mortgage from a bank, you probably have an installment sale. Federal tax forms You may be able to report the part of the gain you cannot exclude on the installment basis. Federal tax forms    Use Form 6252, Installment Sale Income, to report the sale. Federal tax forms Enter your exclusion on line 15 of Form 6252. Federal tax forms Seller-financed mortgage. Federal tax forms   If you sell your home and hold a note, mortgage, or other financial agreement, the payments you receive in most cases consist of both interest and principal. Federal tax forms You must separately report as interest income the interest you receive as part of each payment. Federal tax forms If the buyer of your home uses the property as a main or second home, you must also report the name, address, and social security number (SSN) of the buyer on line 1 of Schedule B (Form 1040A or 1040). Federal tax forms The buyer must give you his or her SSN, and you must give the buyer your SSN. Federal tax forms Failure to meet these requirements may result in a $50 penalty for each failure. Federal tax forms If either you or the buyer does not have and is not eligible to get an SSN, see Social Security Number in chapter 1. Federal tax forms More information. Federal tax forms   For more information on installment sales, see Publication 537, Installment Sales. Federal tax forms Special Situations The situations that follow may affect your exclusion. Federal tax forms Sale of home acquired in a like-kind exchange. Federal tax forms   You cannot claim the exclusion if: You acquired your home in a like-kind exchange (also known as a section 1031 exchange), or your basis in your home is determined by reference to the basis of the home in the hands of the person who acquired the property in a like-kind exchange (for example, you received the home from that person as a gift), and You sold the home during the 5-year period beginning with the date your home was acquired in the like-kind exchange. Federal tax forms Gain from a like-kind exchange is not taxable at the time of the exchange. Federal tax forms This means that gain will not be taxed until you sell or otherwise dispose of the property you receive. Federal tax forms To defer gain from a like-kind exchange, you must have exchanged business or investment property for business or investment property of a like kind. Federal tax forms For more information about like-kind exchanges, see Publication 544, Sales and Other Dispositions of Assets. Federal tax forms Home relinquished in a like-kind exchange. Federal tax forms   If you use your main home partly for business or rental purposes and then exchange the home for another property, see Publication 523. Federal tax forms Expatriates. Federal tax forms   You cannot claim the exclusion if the expatriation tax applies to you. Federal tax forms The expatriation tax applies to certain U. Federal tax forms S. Federal tax forms citizens who have renounced their citizenship (and to certain long-term residents who have ended their residency). Federal tax forms For more information about the expatriation tax, see Expatriation Tax in chapter 4 of Publication 519, U. Federal tax forms S. Federal tax forms Tax Guide for Aliens. Federal tax forms Home destroyed or condemned. Federal tax forms   If your home was destroyed or condemned, any gain (for example, because of insurance proceeds you received) qualifies for the exclusion. Federal tax forms   Any part of the gain that cannot be excluded (because it is more than the maximum exclusion) can be postponed under the rules explained in: Publication 547, in the case of a home that was destroyed, or Publication 544, chapter 1, in the case of a home that was condemned. Federal tax forms Sale of remainder interest. Federal tax forms   Subject to the other rules in this chapter, you can choose to exclude gain from the sale of a remainder interest in your home. Federal tax forms If you make this choice, you cannot choose to exclude gain from your sale of any other interest in the home that you sell separately. Federal tax forms Exception for sales to related persons. Federal tax forms   You cannot exclude gain from the sale of a remainder interest in your home to a related person. Federal tax forms Related persons include your brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Federal tax forms ), and lineal descendants (children, grandchildren, etc. Federal tax forms ). Federal tax forms Related persons also include certain corporations, partnerships, trusts, and exempt organizations. Federal tax forms Recapturing (Paying Back) a Federal Mortgage Subsidy If you financed your home under a federally subsidized program (loans from tax-exempt qualified mortgage bonds or loans with mortgage credit certificates), you may have to recapture all or part of the benefit you received from that program when you sell or otherwise dispose of your home. Federal tax forms You recapture the benefit by increasing your federal income tax for the year of the sale. Federal tax forms You may have to pay this recapture tax even if you can exclude your gain from income under the rules discussed earlier; that exclusion does not affect the recapture tax. Federal tax forms Loans subject to recapture rules. Federal tax forms   The recapture applies to loans that: Came from the proceeds of qualified mortgage bonds, or Were based on mortgage credit certificates. Federal tax forms The recapture also applies to assumptions of these loans. Federal tax forms When recapture applies. Federal tax forms   Recapture of the federal mortgage subsidy applies only if you meet both of the following conditions. Federal tax forms You sell or otherwise dispose of your home at a gain within the first 9 years after the date you close your mortgage loan. Federal tax forms Your income for the year of disposition is more than that year's adjusted qualifying income for your family size for that year (related to the income requirements a person must meet to qualify for the federally subsidized program). Federal tax forms When recapture does not apply. Federal tax forms   Recapture does not apply in any of the following situations. Federal tax forms Your mortgage loan was a qualified home improvement loan (QHIL) of not more than $15,000 used for alterations, repairs, and improvements that protect or improve the basic livability or energy efficiency of your home. Federal tax forms Your mortgage loan was a QHIL of not more than $150,000 in the case of a QHIL used to repair damage from Hurricane Katrina to homes in the hurricane disaster area; a QHIL funded by a qualified mortgage bond that is a qualified Gulf Opportunity Zone Bond; or a QHIL for an owner-occupied home in the Gulf Opportunity Zone (GO Zone), Rita GO Zone, or Wilma GO Zone. Federal tax forms For more information, see Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma. Federal tax forms Also see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. Federal tax forms The home is disposed of as a result of your death. Federal tax forms You dispose of the home more than 9 years after the date you closed your mortgage loan. Federal tax forms You transfer the home to your spouse, or to your former spouse incident to a divorce, where no gain is included in your income. Federal tax forms You dispose of the home at a loss. Federal tax forms Your home is destroyed by a casualty, and you replace it on its original site within 2 years after the end of the tax year when the destruction happened. Federal tax forms The replacement period is extended for main homes destroyed in a federally declared disaster area, a Midwestern disaster area, the Kansas disaster area, and the Hurricane Katrina disaster area. Federal tax forms For more information, see Replacement Period in Publication 547. Federal tax forms You refinance your mortgage loan (unless you later meet the conditions listed previously under When recapture applies ). Federal tax forms Notice of amounts. Federal tax forms   At or near the time of settlement of your mortgage loan, you should receive a notice that provides the federally subsidized amount and other information you will need to figure your recapture tax. Federal tax forms How to figure and report the recapture. Federal tax forms    The recapture tax is figured on Form 8828. Federal tax forms If you sell your home and your mortgage is subject to recapture rules, you must file Form 8828 even if you do not owe a recapture tax. Federal tax forms Attach Form 8828 to your Form 1040. Federal tax forms For more information, see Form 8828 and its instructions. Federal tax forms Prev  Up  Next   Home   More Online Publications