Introduction

This publication explains the tax rules that apply when you sell your main home. Generally, your main home is the one in which you live most of the time.

Gain. 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 return in most cases). Any gain not excluded is taxable.

Loss. You cannot deduct a loss from the sale of your main home.

Worksheets. Worksheets are included in this publication to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the amount of the gain that you can exclude.

Reporting the sale. Do not report the sale of your main home on your tax return unless you have a gain and at least part of it is taxable. Report any taxable gain on Schedule D (Form 1040). You may also have to include Form 4797, Sales of Business Property. See Reporting the Gain in chapter 2.

Who may need to read chapter 3. Chapter 3 of this publication explains the rules that applied to sales before May 7, 1997. You may still need to know those rules, but only if you sold your main home at a gain before May 7, 1997, and all three of the following statements are true.

1. You postponed the gain on the sale as described in chapter 3.
2. The 2-year period you had to replace that home (your replacement period) was suspended while you either:
1. Served in the Armed Forces, or
2. Lived and worked outside the United States.
3. You have not already reported to the IRS your purchase of a new home within your replacement period, or a taxable gain resulting from the end of your replacement period, as described in chapter 3 under What To Report Now.

If all three statements are true or you have questions, see chapter 3.

Date of sale. If you received a Form 1099-S, Proceeds From Real Estate Transactions, the date of sale should be shown in box 1. If you did not receive this form, the date of sale is the earlier of (a) the date title transferred or (b) the date the economic burdens and benefits of ownership shifted to the buyer. In most cases, these dates are the same.

What is not covered in this publication. This publication does not cover the sale of rental property, second homes, or vacation homes. For information on how to report those sales, see Publication 544, Sales and Other Dispositions of Assets.

Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions.

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www.irs.gov.

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Internal Revenue Service
Technical Publications Branch
W:CAR:MP:FP:P
1111 Constitution Ave. NW
Washington, DC 20224

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