Sold Your Home? Tax Tips You Need To Know
 By Terry M. Blair

Even though the housing market has flat-lined in many cities for many months, some lucky folks did manage to sell their homes in 2011.

Are you one of those fortunate few? If so, congratulations. Unfortunately, you can't deduct a loss from the sale of your main home.

But, if you have a gain from the sale of your main home, the IRS says you might qualify to exclude all or part of that gain from your income.

Here's what the IRS wants you to know about the tax consequences of selling your home in 2011.

If You Have A Gain . . .

• In general, you're eligible to exclude the gain from income if you have owned and used your house as your main home for two years out of the five years before the date of its sale.
• If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint tax return in most cases).
• You're not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period before the sale of current your home.
• If you're eligible to exclude all of the gain from the sale of your home, you don't need to report the sale on your tax return.
• If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. 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.
• If you have a gain that can't be excluded, it's taxable. You must report the gain on Form 1040, Schedule D, Capital Gains and Losses.

First-Time Homebuyer Information . . .
If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you're required to repay the credit.

Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence. The full amount of the credit is reflected as additional tax on your 2011 federal tax return.

You'll need to use IRS Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. Use Instructions for Form 5405 to help you complete the form correctly.

More Tax Help For Home Sellers
For more tax information about selling your home, get IRS Publication 523, Selling Your Home. Worksheets are included to help you calculate:

• The adjusted basis of the home you sold
• The gain (or loss) on the sale
• The gain that you're eligible to exclude

Remember that the certified public accountants at AFS ProTax can answer all of your questions about the tax consequences of selling your home in 2011.

These online professionals are just a keystroke away and will answer your tax questions within two business days.

The ProTax CPAs give you complete and confidential answers—at no additional cost to you!



(Posted November 2011)

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