1 / 12

Lesson 13

Lesson 13. Sale of Home. Objectives. Determine if the taxpayer meets the ownership and use tests Determine whether a home is the taxpayer’s main home Determine when the ownership and use tests may be suspended Determine the amount of gain eligible for exclusion from income.

elpida
Download Presentation

Lesson 13

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Lesson 13 Sale of Home

  2. Objectives • Determine if the taxpayer meets the ownership and use tests • Determine whether a home is the taxpayer’s main home • Determine when the ownership and use tests may be suspended • Determine the amount of gain eligible for exclusion from income

  3. Intake/Interview Process Form 13614 – Intake and Interview Sheet - Income Section

  4. Requirements for Exclusion Exclude up to $250,000 ($500,000 if MFJ) of gain on the sale of main home if the following requirements are met: • Ownership Test (either spouse, if married) • Use Test (both spouses, if married) • Have not excluded gain in the past 2 years (neither spouse, if married) • File a joint return, if married

  5. Ownership & Use Tests During the 5-year period before the sale: • Owned the home for at least 2 years, and • Lived in the home (as a main home) for at least 2 years

  6. “Main” Home • The home a taxpayer lives in most of the time is considered a main home • Main home can be a: • House • Boat • Mobile home • Cooperative apartment • Condominium

  7. Reporting the Exclusion • Eligible taxpayers do not report the sale of a main home on a tax return unless: • The gain exceeds the exclusion amount, or • The taxpayer chooses not to exclude it • Report taxable gains on the sale of a main home on Schedule D, Form 1040

  8. Loss on the sale of a main home is not deductible!

  9. Test Period Suspended Members of armed forces can suspend the 5-year test period of the ownership and use tests if: • Serving on “qualified official extended duty” • Period of suspension doesn’t exceed 10 years • Not more than one property at a time is being suspended

  10. Gain on Sale of Main Home Gain = Amount Realized – Adjusted Basis • Amount Realized • Total selling price, less • Selling expenses (commissions, fees, advertising) • Adjusted Basis • Basis (usually cost), plus • Capital improvements

  11. Quality Review (QR) Form 8158 – Quality Review Checklist - Income Section

  12. Lesson Summary • Eligible taxpayers may exclude up to $250,000 ($500,000, if MFJ) gain on the sale of their main home • Taxpayers must meet the ownership and use tests to qualify for exclusion • A main home is the home the taxpayer lives in most of the time • Do not report gains that qualify for exclusion • Losses are not deductible

More Related