Pub 523

Pub 523 is an IRS publication that explains the rules for claiming a home exclusion. It also contains worksheets to help you prepare your tax return and calculate your exclusion amount. It’s especially helpful for military members who may be unfamiliar with the tax rules. The publication is available in Spanish, Vietnamese, Korean, and other languages.

In addition, the IRS has committed to delivering written communications in an alternative language if you state a preference on Schedule LEP (Form 1040), Request for Change in Language Preference. This multi-year project will continue until all eligible taxpayers have been provided with translations in their preferred language.

How Do I Prove My Primary Residence to the IRS?

The IRS has specific rules about what properties qualify as primary residences. This includes the type of home, location, and whether you live there full-time or during part of the year. The key to proving your primary residence is to use a variety of proofs, such as utility bills, voter registration cards, and your driver’s license or car registration. You should also keep records of where you live, how often you visit, and when you sell a property.

If you own more than one home, it’s important to understand which ones qualify as your primary residence for tax purposes and mortgage financing. This will help you to make the best financial decisions and avoid problems with the IRS. A primary residence is a single-family home, apartment, condo, or townhome where you primarily live and spend the majority of your time. If you can prove that, you will benefit from lower mortgage rates and tax benefits, including the deductibility of mortgage interest and exclusion of profits on capital gains taxes when you sell your house.

Do I Have to Report the Home Sale to IRS?

Homeowners who sell their homes can avoid paying tax on the profit if they qualify for a special exclusion. It is called the “sale of a personal residence exclusion.” To qualify, you must own your home for two years out of the last five and use it as your primary residence. You can exclude up to $250,000 for a single filer and $500,000 for a married couple filing jointly.

In addition to this exclusion, you can also claim a home sale deduction for any costs incurred in acquiring, improving, or maintaining your home. This includes purchase and closing expenses, property taxes, and real estate agent commissions.If you haven’t already done so, you should keep all your receipts and records that prove your cost basis in the house. This cost basis is the price you paid for the house plus any capital improvements minus casualty losses, tax credits (like Residential Energy Credits), or other decreases in value.

Does the IRS Know if You Own a House?

The answer to this question depends on whether you qualify for the gain exclusion rules on the sale of a principal residence under IRC section 121. If you do, you can exclude up to $250,000 of your taxable gain ($500,000 for married taxpayers filing jointly).

The ownership and use requirements are two years out of the last five, and the home must be the primary personal residence. Both spouses must meet these requirements, but only one spouse has to be listed as the owner of the property on the tax return.

In addition to the ownership and use tests, a taxpayer can qualify for a partial exclusion if the two-year ownership and use requirements were unmet or the home was sold within the last two years. The IRS will consider a change in place of employment, health problems, or unforeseen circumstances that necessitated the sale and will permit a partial exclusion of up to 50% of the gain (or $125,000 for single filers) on gains from sales within the past two years.