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Free State Efiling

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Free State Efiling

Free state efiling Part Two -   Ingresos Los ocho capítulos de esta sección abordan distintos tipos de ingresos. Free state efiling Explican cuáles ingresos están y cuáles no están sujetos a impuestos. Free state efiling Vea la Parte Tres para información sobre ganancias y pérdidas que se declaran en el Formulario 8949 y el Anexo D (Formulario 1040) y para información que debe saber al vender su vivienda. Free state efiling Table of Contents 5. Free state efiling   Salarios, Sueldos y Otros IngresosRecordatorio Introduction Useful Items - You may want to see: Remuneración del EmpleadoNiñeras. Free state efiling Otras Clases de Remuneración Beneficios Marginales Aportaciones a un Plan de Jubilación Opciones de Compra de Acciones Bienes Restringidos Reglas Especiales para Algunos EmpleadosClero Miembros de Órdenes Religiosas Empleador Extranjero Fuerzas Armadas Voluntarios Beneficios por Enfermedad y LesionesPensiones por Incapacidad Contratos de Seguro de Cuidados a Largo Plazo Compensación del Seguro Obrero Otros Beneficios por Enfermedad y Lesiones 6. Free state efiling   Ingresos de PropinasIntroduction Useful Items - You may want to see: Cómo Mantener un Registro Diario de PropinasRegistro electrónico de propinas. Free state efiling Cómo Declarar las Propinas a su EmpleadorInforme electrónico de propinas. Free state efiling Declaración final. Free state efiling Cómo se Declaran las Propinas en la Declaración de Impuestos Asignación de Propinas 7. Free state efiling   Ingresos de InteresesRecordatorio Introduction Useful Items - You may want to see: Información General SSN para una cuenta conjunta. Free state efiling Cuenta de custodia para su hijo. Free state efiling Multa por no facilitar un SSN. Free state efiling Cómo se declara la retención adicional. Free state efiling Cuenta de ahorros con uno de los padres como fideicomisario. Free state efiling Intereses que no se declaran en el Formulario 1099-INT. Free state efiling Nominatarios. Free state efiling Cantidad incorrecta. Free state efiling Requisito de declarar ciertos datos. Free state efiling Intereses Sujetos a ImpuestosIntereses sujetos a la multa por retiro prematuro de fondos. Free state efiling Préstamo para invertir en un certificado de depósito. Free state efiling Bonos de Ahorro de los Estados Unidos Programa de Bonos de Ahorro para Estudios Letras, Pagarés y Bonos del Tesoro de los Estados Unidos Bonos que se Venden Entre las Fechas de Pago de los Intereses Seguros Obligaciones del Gobierno Estatal o Local Descuento de la Emisión Original (OID) Cuándo Se Deben Declarar los Ingresos de InteresesRecibo implícito. Free state efiling Cómo se Declaran los Ingresos de InteresesAnexo B (Formulario 1040A o Formulario 1040). Free state efiling Cómo declarar los intereses exentos de impuesto. Free state efiling Intereses de bonos de ahorro de los EE. Free state efiling UU. Free state efiling declarados anteriormente. Free state efiling 8. Free state efiling   Dividendos y Otras DistribucionesRecordatorio Introduction Useful Items - You may want to see: Información GeneralDividendos no declarados en el Formulario 1099-DIV. Free state efiling Cómo se le informa del impuesto retenido. Free state efiling Nominatarios. Free state efiling Dividendos OrdinariosDividendos Calificados Dividendos Utilizados para la Compra de más Acciones Fondos de Inversión del Mercado Monetario Distribuciones de Ganancias de CapitalAjuste a la base. Free state efiling Distribuciones que no son DividendosDistribuciones de Liquidación Distribuciones de Acciones y Derechos a Acciones Otras DistribucionesRequisito de declarar ciertos datos. Free state efiling Tratamiento del impuesto mínimo alternativo. Free state efiling Cómo Declarar el Ingreso de DividendosDeducción de los intereses de inversiones. Free state efiling 9. Free state efiling   Ingresos y Gastos de AlquilerIntroduction Useful Items - You may want to see: Ingresos de Alquiler Gastos de AlquilerDesocupada mientras está en venta. Free state efiling Reparaciones y Mejoras Otros Gastos Propiedad que Pasa a Ser de Alquiler Alquiler de Parte de una Propiedad Alquiler sin Fines de Lucro Uso Personal de una Unidad Habitable (Incluyendo una Casa de Vacaciones)Cómo Dividir los Gastos Unidad Habitable Usada como Vivienda Cómo Declarar Ingresos y Deducciones DepreciaciónCambio de método contable para deducir depreciación no declarada. Free state efiling Límites sobre las Pérdidas de AlquilerReglas sobre el Monto de Riesgo Límites sobre las Actividades Pasivas Cómo Declarar Ingresos y Gastos de AlquilerAnexo E (Formulario 1040) 10. Free state efiling   Planes de Jubilación, Pensiones y AnualidadesQué Hay de Nuevo Recordatorio IntroductionLa Regla General. Free state efiling Arreglos de ahorros para la jubilación (IRA, por sus siglas en inglés). Free state efiling Beneficios de la jubilación del gobierno federal. Free state efiling Useful Items - You may want to see: Información GeneralReinversiones en arreglos de ahorros para la jubilación designados Roth IRA dentro del mismo plan. Free state efiling Cómo Hacer la Declaración Costo (Inversión en el Contrato) Tributación de Pagos PeriódicosExclusión limitada al costo. Free state efiling Exclusión no limitada al costo. Free state efiling Método Simplificado Tributación de Pagos no PeriódicosDistribuciones de Suma Global ReinversionesReinversiones en arreglos de ahorros para la jubilación designados Roth IRA dentro del mismo plan. Free state efiling Impuestos Adicionales EspecialesImpuesto sobre Distribuciones Prematuras Impuestos sobre Acumulación en Exceso Sobrevivientes y Beneficiarios 11. Free state efiling   Beneficios del Seguro Social y Beneficios Equivalentes de la Jubilación para Empleados FerroviariosIntroduction Useful Items - You may want to see: ¿Está Sujeta a Impuestos Alguna Parte de los Beneficios? Cómo Declarar los Beneficios¿Cuánto Está Sujeto a Impuestos? Ejemplos Deducciones Relacionadas con los BeneficiosReintegros Superiores a los Beneficios Brutos 12. Free state efiling   Otros IngresosIntroduction Useful Items - You may want to see: Trueque Deudas CanceladasIntereses incluidos en una deuda cancelada. Free state efiling Excepciones Anfitrión o Anfitriona Ganancias de un Seguro de VidaCónyuge sobreviviente. Free state efiling Ganancias de un Contrato de Dotación Beneficios Acelerados por Fallecimiento Funcionario de Seguridad Pública Fallecido en el Cumplimiento del Deber Ingresos de Sociedades Colectivas Ingresos de Sociedad Anónima de Tipo S Recuperación de FondosRecuperaciones de Deducciones Detalladas Alquileres de Bienes Muebles ReintegrosMétodo 1. Free state efiling Método 2. Free state efiling RegalíasAgotamiento. Free state efiling Carbón y mineral de hierro. Free state efiling Venta de participación de bienes. Free state efiling Parte de una futura producción vendida. Free state efiling Beneficios por DesempleoTipos de compensación por desempleo. Free state efiling Programa gubernamental. Free state efiling Reintegro de compensación por desempleo. Free state efiling Retención de impuestos. Free state efiling Reintegro de beneficios. Free state efiling Beneficios del Bienestar Social y Otros Beneficios de Asistencia Pública Otros IngresosAngustia emocional. Free state efiling Deducción por costos relativos a una demanda por discriminación ilegal. Free state efiling Medidas de ahorro de energía. Free state efiling Unidad habitable. Free state efiling Ingreso actual que se requiere distribuir. Free state efiling Ingreso actual que no se requiere distribuir. Free state efiling Cómo hacer la declaración. Free state efiling Pérdidas. Free state efiling Fideicomiso de un cesionario. Free state efiling Remuneración para personas que no son empleados. Free state efiling Director de una sociedad anónima. Free state efiling Representante personal. Free state efiling Administrador de una ocupación o negocio de patrimonio en quiebra. Free state efiling Notario público. Free state efiling Funcionario de distrito electoral. Free state efiling Pagos por complejidad del cuidado. Free state efiling Mantenimiento del espacio en el hogar. Free state efiling Declaración de pagos sujetos a impuestos. Free state efiling Loterías y rifas. Free state efiling Formulario W-2G. Free state efiling Cómo declarar ganancias de juegos y apuestas y mantenimiento de documentación. Free state efiling Pensión o arreglo IRA heredado. Free state efiling Recompensas o bonificaciones para empleados. Free state efiling Premio Pulitzer, Premio Nobel y premios similares. Free state efiling Pago por servicios. Free state efiling Pagos del Departamento de Asuntos de Veteranos (VA). Free state efiling Premios. Free state efiling Indemnización por huelga y cierre patronal. Free state efiling Prev  Up  Next   Home   More Online Publications

Tax Topic Index

Topic 123

These Tax Topics contain general individual and business tax information. If you don't find the answer to your question below, also check Frequently Asked Questions, Interactive Tax Assistant (ITA) and Tax Trails.

IRS Help Available Topic 100
IRS Services – Volunteer Tax Assistance, Outreach Programs and Identity Theft Topic 101
Tax Assistance for Individuals with Disabilities and the Deaf and Hard of Hearing Topic 102
Tax Help for Small Businesses and the Self-Employed Topic 103
Taxpayer Advocate Service – Your Voice at the IRS Topic 104
Armed Forces Tax Information Topic 105
Tax Relief in Disaster Situations Topic 107
IRS Procedures Topic 150
Your Appeal Rights Topic 151
Refund Information Topic 152
What To Do if You Haven't Filed Your Tax Return Topic 153
Form W-2 and Form 1099-R (What to Do if Incorrect or Not Received) Topic 154
Forms and Publications – How to Order Topic 155
Copy of Your Tax Return – How to Get One Topic 156
Change of Address – How to Notify the IRS Topic 157
Ensuring Proper Credit of Payments Topic 158
Prior Year(s) Form W-2 (How to Get a Copy) Topic 159
Form 1099-A (Acquisition or Abandonment of Secured Property) and Form 1099-C (Cancellation of Debt) Topic 160
Collection Topic 200
The Collection Process Topic 201
Tax Payment Options Topic 202
Refund Offsets for Unpaid Child Support, Certain Federal and State Debts, and Unemployment Compensation Debts Topic 203
Offers In Compromise Topic 204
Innocent Spouse Relief (Including Separation of Liability and Equitable Relief) Topic 205
Dishonored Payments Topic 206
Alternative Filing Methods Topic 250
Substitute Tax Forms Topic 253
How to Choose a Tax Return Preparer Topic 254
Self-Select PIN Signature Method for Online Registration Topic 255
General Information Topic 300
When, Where, and How to File Topic 301
Checklist of Common Errors When Preparing Your Tax Return Topic 303
Extensions of Time to File Your Tax Return Topic 304
Recordkeeping Topic 305
Penalty for Underpayment of Estimated Tax Topic 306
Backup Withholding Topic 307
Amended Returns Topic 308
Roth IRA Contributions Topic 309
Coverdell Education Savings Accounts Topic 310
Power of Attorney Information Topic 311
Disclosure Authorizations Topic 312
Qualified Tuition Programs (QTPs) Topic 313
Which Forms to File Topic 350
Which Form – 1040, 1040A, or 1040EZ? Topic 352
Decedents Topic 356
Types of Income Topic 400
Wages and Salaries Topic 401
Interest Received Topic 403
Dividends Topic 404
Business Income Topic 407
Capital Gains and Losses Topic 409
Pensions and Annuities Topic 410
Pensions – The General Rule and the Simplified Method Topic 411
Lump-Sum Distributions Topic 412
Rollovers from Retirement Plans Topic 413
Rental Income and Expenses Topic 414
Renting Residential and Vacation Property Topic 415
Farming and Fishing Income Topic 416
Earnings for Clergy Topic 417
Unemployment Compensation Topic 418
Gambling Income and Losses Topic 419
Bartering Income Topic 420
Scholarship and Fellowship Grants Topic 421
Social Security and Equivalent Railroad Retirement Benefits Topic 423
401(k) Plans Topic 424
Passive Activities – Losses and Credits Topic 425
Stock Options Topic 427
Traders in Securities (Information for Form 1040 Filers) Topic 429
Receipt of Stock in a Demutualization Topic 430
Canceled Debt – Is It Taxable or Not? Topic 431
Adjustments to Income Topic 450
Individual Retirement Arrangements (IRAs) Topic 451
Alimony Paid Topic 452
Bad Debt Deduction Topic 453
Moving Expenses Topic 455
Student Loan Interest Deduction Topic 456
Tuition and Fees Deduction Topic 457
Educator Expense Deduction Topic 458
Itemized Deductions Topic 500
Should I Itemize? Topic 501
Medical and Dental Expenses Topic 502
Deductible Taxes Topic 503
Home Mortgage Points Topic 504
Interest Expense Topic 505
Charitable Contributions Topic 506
Miscellaneous Expenses Topic 508
Business Use of Home Topic 509
Business Use of Car Topic 510
Business Travel Expenses Topic 511
Business Entertainment Expenses Topic 512
Educational Expenses Topic 513
Employee Business Expenses Topic 514
Casualty, Disaster, and Theft Losses (Including Federally Declared Disaster Areas) Topic 515
Tax Computation Topic 550
Standard Deduction Topic 551
Tax and Credits Figured by the IRS Topic 552
Tax on a Child's Investment Income Topic 553
Self-Employment Tax Topic 554
Alternative Minimum Tax Topic 556
Additional Tax on Early Distributions from Traditional and ROTH IRAs Topic 557
Additional Tax on Early Distributions from Retirement Plans, Other Than IRAs Topic 558
Net Investment Income Tax Topic 559
Additional Medicare Tax Topic 560
Tax Credits Topic 600
Earned Income Credit Topic 601
Child and Dependent Care Credit Topic 602
Adoption Credit and Adoption Assistance Programs Topic 607
Excess Social Security and RRTA Tax Withheld Topic 608
Retirement Savings Contributions Credit Topic 610
Repayment of the First-time Homebuyer Credit Topic 611
IRS Notices Topic 650
Notices – What to Do Topic 651
Notice of Underreported Income – CP-2000 Topic 652
IRS Notices and Bills, Penalties and Interest Charges Topic 653
Basis of Assets, Depreciation, and Sale of Assets Topic 700
Sale of Your Home Topic 701
Basis of Assets Topic 703
Depreciation Topic 704
Installment Sales Topic 705
Employer Tax Information Topic 750
Social Security and Medicare Withholding Rates Topic 751
Form W-2 – Where, When, and How to File Topic 752
Form W-4 – Employee's Withholding Allowance Certificate Topic 753
Employer Identification Number (EIN) – How to Apply Topic 755
Employment Taxes for Household Employees Topic 756
Forms 941 and 944 – Deposit Requirements Topic 757
Form 941 – Employer's Quarterly Federal Tax Return and Form 944 – Employer's Annual Federal Tax Return Topic 758
Form 940 – Employer's Annual Federal Unemployment (FUTA) Tax Return – Filing and Deposit Requirements Topic 759
Reporting and Deposit Requirements for Agricultural Employers Topic 760
Tips – Withholding and Reporting Topic 761
Independent Contractor vs. Employee Topic 762
The Affordable Care Act Topic 763
Electronic Media Filers – 1099 Series and Related Information Returns Topic 800
Who Must File Information Returns Electronically Topic 801
Applications, Forms, and Information Topic 802
Waivers and Extensions Topic 803
Test Files and Combined Federal and State Filing Topic 804
Electronic Filing of Information Returns Topic 805
Tax Information for Aliens and U.S. Citizens Living Abroad Topic 850
Resident and Nonresident Aliens Topic 851
Foreign Tax Credit Topic 856
Individual Taxpayer Identification Number (ITIN) – Form W-7 Topic 857
Alien Tax Clearance Topic 858
Tax Information for Residents of Puerto Rico Topic 900
Is a Person With Income from Puerto Rican Sources Required to File a U.S. Federal Income Tax Return? Topic 901
Credits and Deductions for Taxpayers With Puerto Rican Source Income That is Exempt From U.S. Tax Topic 902
Federal Employment Tax in Puerto Rico Topic 903
Tax Assistance for Residents of Puerto Rico Topic 904

Page Last Reviewed or Updated: March 20, 2014

The Free State Efiling

Free state efiling 15. Free state efiling   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. Free state efiling More information. Free state efiling Special SituationsException for sales to related persons. Free state efiling Recapturing (Paying Back) a Federal Mortgage Subsidy Reminder Home sold with undeducted points. Free state efiling  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. Free state efiling See Mortgage ending early under Points in chapter 23. Free state efiling Introduction This chapter explains the tax rules that apply when you sell your main home. Free state efiling In most cases, your main home is the one in which you live most of the time. Free state efiling 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). Free state efiling See Excluding the Gain , later. Free state efiling Generally, if you can exclude all the gain, you do not need to report the sale on your tax return. Free state efiling If you have gain that cannot be excluded, it is taxable. Free state efiling Report it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040). Free state efiling You may also have to complete Form 4797, Sales of Business Property. Free state efiling See Reporting the Sale , later. Free state efiling If you have a loss on the sale, you generally cannot deduct it on your return. Free state efiling However, you may need to report it. Free state efiling See Reporting the Sale , later. Free state efiling The following are main topics in this chapter. Free state efiling Figuring gain or loss. Free state efiling Basis. Free state efiling Excluding the gain. Free state efiling Ownership and use tests. Free state efiling Reporting the sale. Free state efiling Other topics include the following. Free state efiling Business use or rental of home. Free state efiling Recapturing a federal mortgage subsidy. Free state efiling 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. Free state efiling ” 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. Free state efiling 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. Free state efiling Land. Free state efiling   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. Free state efiling 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. Free state efiling See Vacant land under Main Home in Publication 523 for more information. Free state efiling Example. Free state efiling You buy a piece of land and move your main home to it. Free state efiling Then you sell the land on which your main home was located. Free state efiling This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. Free state efiling More than one home. Free state efiling   If you have more than one home, you can exclude gain only from the sale of your main home. Free state efiling You must include in income gain from the sale of any other home. Free state efiling 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. Free state efiling Example 1. Free state efiling You own two homes, one in New York and one in Florida. Free state efiling 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. Free state efiling In the absence of facts and circumstances indicating otherwise, the New York home is your main home. Free state efiling You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. Free state efiling Example 2. Free state efiling You own a house, but you live in another house that you rent. Free state efiling The rented house is your main home. Free state efiling Example 3. Free state efiling You own two homes, one in Virginia and one in New Hampshire. Free state efiling In 2009 and 2010, you lived in the Virginia home. Free state efiling In 2011 and 2012, you lived in the New Hampshire home. Free state efiling In 2013, you lived again in the Virginia home. Free state efiling Your main home in 2009, 2010, and 2013 is the Virginia home. Free state efiling Your main home in 2011 and 2012 is the New Hampshire home. Free state efiling You would be eligible to exclude gain from the sale of either home (but not both) in 2013. Free state efiling Property used partly as your main home. Free state efiling   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. Free state efiling For details, see Business Use or Rental of Home , later. Free state efiling 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. Free state efiling Subtract the adjusted basis from the amount realized to get your gain or loss. Free state efiling     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. Free state efiling 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. Free state efiling Payment by employer. Free state efiling   You may have to sell your home because of a job transfer. Free state efiling 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. Free state efiling 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. Free state efiling Option to buy. Free state efiling   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. Free state efiling If the option is not exercised, you must report the amount as ordinary income in the year the option expires. Free state efiling Report this amount on Form 1040, line 21. Free state efiling Form 1099-S. Free state efiling   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. Free state efiling   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. Free state efiling Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. Free state efiling Amount Realized The amount realized is the selling price minus selling expenses. Free state efiling Selling expenses. Free state efiling   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. Free state efiling ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. Free state efiling This adjusted basis must be determined before you can figure gain or loss on the sale of your home. Free state efiling For information on how to figure your home's adjusted basis, see Determining Basis , later. Free state efiling Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. Free state efiling Gain on sale. Free state efiling   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. Free state efiling Loss on sale. Free state efiling   If the amount realized is less than the adjusted basis, the difference is a loss. Free state efiling A loss on the sale of your main home cannot be deducted. Free state efiling Jointly owned home. Free state efiling   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. Free state efiling Separate returns. Free state efiling   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. Free state efiling Your ownership interest is generally determined by state law. Free state efiling Joint owners not married. Free state efiling   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. Free state efiling Each of you applies the rules discussed in this chapter on an individual basis. Free state efiling Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. Free state efiling Foreclosure or repossession. Free state efiling   If your home was foreclosed on or repossessed, you have a disposition. Free state efiling See Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments, to determine if you have ordinary income, gain, or loss. Free state efiling Abandonment. Free state efiling   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. Free state efiling Trading (exchanging) homes. Free state efiling   If you trade your old home for another home, treat the trade as a sale and a purchase. Free state efiling Example. Free state efiling You owned and lived in a home with an adjusted basis of $41,000. Free state efiling 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. Free state efiling This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 – $41,000). Free state efiling 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). Free state efiling Transfer to spouse. Free state efiling   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. Free state efiling This is true even if you receive cash or other consideration for the home. Free state efiling As a result, the rules in this chapter do not apply. Free state efiling More information. Free state efiling   If you need more information, see Transfer to spouse in Publication 523 and Property Settlements in Publication 504, Divorced or Separated Individuals. Free state efiling Involuntary conversion. Free state efiling   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. Free state efiling 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 . Free state efiling Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. Free state efiling Your basis in your home is determined by how you got the home. Free state efiling Generally, your basis is its cost if you bought it or built it. Free state efiling If you got it in some other way (inheritance, gift, etc. Free state efiling ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. Free state efiling While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. Free state efiling 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. Free state efiling See Adjusted Basis , later. Free state efiling You can find more information on basis and adjusted basis in chapter 13 of this publication and in Publication 523. Free state efiling Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. Free state efiling Purchase. Free state efiling   If you bought your home, your basis is its cost to you. Free state efiling This includes the purchase price and certain settlement or closing costs. Free state efiling 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. Free state efiling If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed in Publication 523. Free state efiling Settlement fees or closing costs. Free state efiling   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. Free state efiling 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. Free state efiling 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). Free state efiling    Chapter 13 lists some of the settlement fees and closing costs that you can include in the basis of property, including your home. Free state efiling It also lists some settlement costs that cannot be included in basis. Free state efiling   Also see Publication 523 for additional items and a discussion of basis other than cost. Free state efiling Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. Free state efiling To figure your adjusted basis, you can use Worksheet 1 in Publication 523. Free state efiling 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. Free state efiling Increases to basis. Free state efiling   These include the following. Free state efiling Additions and other improvements that have a useful life of more than 1 year. Free state efiling Special assessments for local improvements. Free state efiling Amounts you spent after a casualty to restore damaged property. Free state efiling Improvements. Free state efiling   These add to the value of your home, prolong its useful life, or adapt it to new uses. Free state efiling You add the cost of additions and other improvements to the basis of your property. Free state efiling   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. Free state efiling An addition to your house, such as a new deck, a sunroom, or a new garage, is also an improvement. Free state efiling Repairs. Free state efiling   These maintain your home in good condition but do not add to its value or prolong its life. Free state efiling You do not add their cost to the basis of your property. Free state efiling   Examples of repairs include repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes. Free state efiling Decreases to basis. Free state efiling   These include the following. Free state efiling Discharge of qualified principal residence indebtedness that was excluded from income. Free state efiling Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. Free state efiling For details, see Publication 4681. Free state efiling Gain you postponed from the sale of a previous home before May 7, 1997. Free state efiling Deductible casualty losses. Free state efiling Insurance payments you received or expect to receive for casualty losses. Free state efiling Payments you received for granting an easement or right-of-way. Free state efiling Depreciation allowed or allowable if you used your home for business or rental purposes. Free state efiling Energy-related credits allowed for expenditures made on the residence. Free state efiling (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. Free state efiling ) Adoption credit you claimed for improvements added to the basis of your home. Free state efiling Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. Free state efiling 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. Free state efiling 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. Free state efiling 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). Free state efiling 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. Free state efiling Discharges of qualified principal residence indebtedness. Free state efiling   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. Free state efiling This exclusion applies to discharges made after 2006 and before 2014. Free state efiling 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. Free state efiling   File Form 982 with your tax return. Free state efiling See the form's instructions for detailed information. Free state efiling Recordkeeping. Free state efiling You should keep records to prove your home's adjusted basis. Free state efiling 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. Free state efiling 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. Free state efiling Keep records proving the basis of both homes as long as they are needed for tax purposes. Free state efiling 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. Free state efiling Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. Free state efiling 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. Free state efiling To qualify, you must meet the ownership and use tests described later. Free state efiling 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. Free state efiling You can use Worksheet 2 in Publication 523 to figure the amount of your exclusion and your taxable gain, if any. Free state efiling If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. Free state efiling See Publication 505, Tax Withholding and Estimated Tax. Free state efiling 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. Free state efiling You meet the ownership test. Free state efiling You meet the use test. Free state efiling During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Free state efiling For details on gain allocated to periods of nonqualified use, see Periods of nonqualified use , later. Free state efiling 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 . Free state efiling Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Free state efiling 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). Free state efiling Exception. Free state efiling   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. Free state efiling However, the maximum amount you may be able to exclude will be reduced. Free state efiling See Reduced Maximum Exclusion , later. Free state efiling Example 1—home owned and occupied for at least 2 years. Free state efiling Mya bought and moved into her main home in September 2011. Free state efiling She sold the home at a gain in October 2013. Free state efiling 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. Free state efiling She meets the ownership and use tests. Free state efiling Example 2—ownership test met but use test not met. Free state efiling Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. Free state efiling He later sold the home for a gain. Free state efiling He owned the home during the entire 5-year period ending on the date of sale. Free state efiling He meets the ownership test but not the use test. Free state efiling He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). Free state efiling 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. Free state efiling 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. Free state efiling Temporary absence. Free state efiling   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. Free state efiling The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. Free state efiling Example 1. Free state efiling David Johnson, who is single, bought and moved into his home on February 1, 2011. Free state efiling Each year during 2011 and 2012, David left his home for a 2-month summer vacation. Free state efiling David sold the house on March 1, 2013. Free state efiling Although the total time David used his home is less than 2 years (21 months), he meets the requirement and may exclude gain. Free state efiling 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. Free state efiling Example 2. Free state efiling Professor Paul Beard, who is single, bought and moved into a house on August 18, 2010. Free state efiling He lived in it as his main home continuously until January 5, 2012, when he went abroad for a 1-year sabbatical leave. Free state efiling On February 6, 2013, 1 month after returning from the leave, Paul sold the house at a gain. Free state efiling Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. Free state efiling He cannot exclude any part of his gain, because he did not use the residence for the required 2 years. Free state efiling Ownership and use tests met at different times. Free state efiling   You can meet the ownership and use tests during different 2-year periods. Free state efiling However, you must meet both tests during the 5-year period ending on the date of the sale. Free state efiling Example. Free state efiling Beginning in 2002, Helen Jones lived in a rented apartment. Free state efiling The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. Free state efiling In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. Free state efiling On July 12, 2013, while still living in her daughter's home, she sold her condominium. Free state efiling 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. Free state efiling She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). Free state efiling She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). Free state efiling 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. Free state efiling Cooperative apartment. Free state efiling   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. Free state efiling Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. Free state efiling Exception for individuals with a disability. Free state efiling   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. Free state efiling 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. Free state efiling 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. Free state efiling Previous home destroyed or condemned. Free state efiling   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. Free state efiling This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home. Free state efiling 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. Free state efiling Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Free state efiling   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. Free state efiling 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. Free state efiling 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. Free state efiling   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. Free state efiling 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. Free state efiling 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. Free state efiling (But see Special rules for joint returns , next. Free state efiling ) Special rules for joint returns. Free state efiling   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Free state efiling You are married and file a joint return for the year. Free state efiling Either you or your spouse meets the ownership test. Free state efiling Both you and your spouse meet the use test. Free state efiling 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. Free state efiling 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. Free state efiling For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. Free state efiling Example 1—one spouse sells a home. Free state efiling Emily sells her home in June 2013 for a gain of $300,000. Free state efiling She marries Jamie later in the year. Free state efiling She meets the ownership and use tests, but Jamie does not. Free state efiling Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. Free state efiling The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. Free state efiling Example 2—each spouse sells a home. Free state efiling 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. Free state efiling He meets the ownership and use tests on his home, but Emily does not. Free state efiling Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. Free state efiling However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. Free state efiling Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. Free state efiling 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. Free state efiling Sale of main home by surviving spouse. Free state efiling   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. Free state efiling   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. Free state efiling The sale or exchange took place after 2008. Free state efiling The sale or exchange took place no more than 2 years after the date of death of your spouse. Free state efiling You have not remarried. Free state efiling You and your spouse met the use test at the time of your spouse's death. Free state efiling You or your spouse met the ownership test at the time of your spouse's death. Free state efiling Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. Free state efiling Example. Free state efiling   Harry owned and used a house as his main home since 2009. Free state efiling Harry and Wilma married on July 1, 2013, and from that date they use Harry's house as their main home. Free state efiling Harry died on August 15, 2013, and Wilma inherited the property. Free state efiling Wilma sold the property on September 3, 2013, at which time she had not remarried. Free state efiling 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. Free state efiling Home transferred from spouse. Free state efiling   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. Free state efiling Use of home after divorce. Free state efiling   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. Free state efiling 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. Free state efiling 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. Free state efiling In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. Free state efiling A change in place of employment. Free state efiling Health. Free state efiling Unforeseen circumstances. Free state efiling Unforeseen circumstances. Free state efiling   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. Free state efiling   See Publication 523 for more information and to use Worksheet 3 to figure your reduced maximum exclusion. Free state efiling 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. Free state efiling But you must meet the ownership and use tests. Free state efiling Periods of nonqualified use. Free state efiling   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. Free state efiling 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. Free state efiling Exceptions. Free state efiling   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. Free state efiling 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. Free state efiling 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. Free state efiling Gain from the sale or exchange of property allocable to nonqualified use will not qualify for the exclusion. Free state efiling Calculation. Free state efiling   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. Free state efiling Example 1. Free state efiling On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. Free state efiling 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. Free state efiling The house was rented from June 1, 2009, to March 31, 2011. Free state efiling Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. Free state efiling 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. Free state efiling 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. Free state efiling 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. Free state efiling Amy divides 668 by 2,080 and obtains a decimal (rounded to at least three decimal places) of 0. Free state efiling 321. Free state efiling 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. Free state efiling 321. Free state efiling Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain. Free state efiling Example 2. Free state efiling William owned and used a house as his main home from 2007 through 2010. Free state efiling On January 1, 2011, he moved to another state. Free state efiling He rented his house from that date until April 30, 2013, when he sold it. Free state efiling 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. Free state efiling He must report the sale on Form 4797 because it was rental property at the time of sale. Free state efiling 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. Free state efiling Because he met the ownership and use tests, he can exclude gain up to $250,000. Free state efiling 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. Free state efiling Depreciation after May 6, 1997. Free state efiling   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. Free state efiling 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. Free state efiling See Publication 544 for more information. Free state efiling Property used partly for business or rental. Free state efiling   If you used property partly as a home and partly for business or to produce rental income, see Publication 523. Free state efiling 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. Free state efiling If any of these conditions apply, report the entire gain or loss. Free state efiling For details on how to report the gain or loss, see the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949. Free state efiling 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). Free state efiling See Business Use or Rental of Home in Publication 523 and the Instructions for Form 4797. Free state efiling Installment sale. Free state efiling    Some sales are made under arrangements that provide for part or all of the selling price to be paid in a later year. Free state efiling These sales are called “installment sales. Free state efiling ” 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. Free state efiling You may be able to report the part of the gain you cannot exclude on the installment basis. Free state efiling    Use Form 6252, Installment Sale Income, to report the sale. Free state efiling Enter your exclusion on line 15 of Form 6252. Free state efiling Seller-financed mortgage. Free state efiling   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. Free state efiling You must separately report as interest income the interest you receive as part of each payment. Free state efiling 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). Free state efiling The buyer must give you his or her SSN, and you must give the buyer your SSN. Free state efiling Failure to meet these requirements may result in a $50 penalty for each failure. Free state efiling If either you or the buyer does not have and is not eligible to get an SSN, see Social Security Number in chapter 1. Free state efiling More information. Free state efiling   For more information on installment sales, see Publication 537, Installment Sales. Free state efiling Special Situations The situations that follow may affect your exclusion. Free state efiling Sale of home acquired in a like-kind exchange. Free state efiling   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. Free state efiling Gain from a like-kind exchange is not taxable at the time of the exchange. Free state efiling This means that gain will not be taxed until you sell or otherwise dispose of the property you receive. Free state efiling 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. Free state efiling For more information about like-kind exchanges, see Publication 544, Sales and Other Dispositions of Assets. Free state efiling Home relinquished in a like-kind exchange. Free state efiling   If you use your main home partly for business or rental purposes and then exchange the home for another property, see Publication 523. Free state efiling Expatriates. Free state efiling   You cannot claim the exclusion if the expatriation tax applies to you. Free state efiling The expatriation tax applies to certain U. Free state efiling S. Free state efiling citizens who have renounced their citizenship (and to certain long-term residents who have ended their residency). Free state efiling For more information about the expatriation tax, see Expatriation Tax in chapter 4 of Publication 519, U. Free state efiling S. Free state efiling Tax Guide for Aliens. Free state efiling Home destroyed or condemned. Free state efiling   If your home was destroyed or condemned, any gain (for example, because of insurance proceeds you received) qualifies for the exclusion. Free state efiling   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. Free state efiling Sale of remainder interest. Free state efiling   Subject to the other rules in this chapter, you can choose to exclude gain from the sale of a remainder interest in your home. Free state efiling 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. Free state efiling Exception for sales to related persons. Free state efiling   You cannot exclude gain from the sale of a remainder interest in your home to a related person. Free state efiling Related persons include your brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Free state efiling ), and lineal descendants (children, grandchildren, etc. Free state efiling ). Free state efiling Related persons also include certain corporations, partnerships, trusts, and exempt organizations. Free state efiling 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. Free state efiling You recapture the benefit by increasing your federal income tax for the year of the sale. Free state efiling 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. Free state efiling Loans subject to recapture rules. Free state efiling   The recapture applies to loans that: Came from the proceeds of qualified mortgage bonds, or Were based on mortgage credit certificates. Free state efiling The recapture also applies to assumptions of these loans. Free state efiling When recapture applies. Free state efiling   Recapture of the federal mortgage subsidy applies only if you meet both of the following conditions. Free state efiling You sell or otherwise dispose of your home at a gain within the first 9 years after the date you close your mortgage loan. Free state efiling 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). Free state efiling When recapture does not apply. Free state efiling   Recapture does not apply in any of the following situations. Free state efiling 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. Free state efiling 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. Free state efiling For more information, see Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma. Free state efiling Also see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. Free state efiling The home is disposed of as a result of your death. Free state efiling You dispose of the home more than 9 years after the date you closed your mortgage loan. Free state efiling You transfer the home to your spouse, or to your former spouse incident to a divorce, where no gain is included in your income. Free state efiling You dispose of the home at a loss. Free state efiling 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. Free state efiling 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. Free state efiling For more information, see Replacement Period in Publication 547. Free state efiling You refinance your mortgage loan (unless you later meet the conditions listed previously under When recapture applies ). Free state efiling Notice of amounts. Free state efiling   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. Free state efiling How to figure and report the recapture. Free state efiling    The recapture tax is figured on Form 8828. Free state efiling 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. Free state efiling Attach Form 8828 to your Form 1040. Free state efiling For more information, see Form 8828 and its instructions. Free state efiling Prev  Up  Next   Home   More Online Publications