Ten Key Tax Facts about Home Sales
In most cases, gains from sales are taxable. But did you know that if you sell your home, you may not have to pay taxes? Here are ten facts to keep in mind if you sell your home this year.
- Exclusion of Gain. You may be able to exclude part or all of the gain from the sale of your home. This rule may apply if you meet the eligibility test. Parts of the test involve your ownership and use of the home. You must have owned and used it as your main home for at least two out of the five years before the date of sale.
- Exceptions May Apply. There are exceptions to the ownership, use and other rules. One exception applies to persons with a disability. Another applies to certain members of the military. That rule includes certain government and Peace Corps workers. For more on this topic, seePublication 523, Selling Your Home.
- Exclusion Limit. The most gain you can exclude from tax is $250,000. This limit is $500,000 for joint returns. The Net Investment Income Tax will not apply to the excluded gain.
- May Not Need to Report Sale. If the gain is not taxable, you may not need to report the sale to the IRS on your tax return.
- When You Must Report the Sale. You must report the sale on your tax return if you can’t exclude all or part of the gain. You must report the sale if you choose not to claim the exclusion. That’s also true if you get Form 1099-S, Proceeds From Real Estate Transactions. If you report the sale, you should review the Questions and Answers on the Net Investment Income Taxon IRS.gov.
- Exclusion Frequency Limit. Generally, you may exclude the gain from the sale of your main home only once every two years. Some exceptions may apply to this rule.
- Only a Main Home Qualifies. If you own more than one home, you may only exclude the gain on the sale of your main home. Your main home usually is the home that you live in most of the time.
- First-time Homebuyer Credit. If you claimed the first-time homebuyer credit when you bought the home, special rules apply to the sale. For more on those rules, see Publication 523.
- Home Sold at a Loss. If you sell your main home at a loss, you can’t deduct the loss on your tax return.
- Report Your Address Change. After you sell your home and move, update your address with the IRS. To do this, file Form 8822, Change of Address. You can find the address to send it to in the form’s instructions on page two. If you purchase health insurance through the Health Insurance Marketplace, you should also notify the Marketplace when you move out of the area covered by your current Marketplace plan.
Additional IRS Resources:
IRS YouTube Videos:
- Selling Your Home – English | Spanish | ASL
- Premium Tax Credit: Changes in Circumstances – English | Spanish | ASL
- Premium Tax Credit – English | Spanish | ASL
IRS Podcasts:
Upcoming Tax Deadlines
March
| Day | |
|---|---|
| 01 | Farmers and Fishermen – File your 2022 income tax return (Form 1040 or Form 1040-SR) and pay all tax due. However, you have until April 18 to file if you paid your 2022 estimated tax by January 17, 2023. |
| 02 | Health Coverage Reporting – If you’re an Applicable Large Employer, provide Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to full-time employees. For all other providers of minimum essential coverage, provide Form 1095-B, Health Coverage, to responsible individuals. See the Instructions for Forms 1094-B and 1095-B, and the Instructions for Forms 1094-C and 1095-C for more information about the information reporting requirements. |
| 10 | Employees Who Work for Tips – If you received $20 or more in tips during February, you must report them to your employer (employees are required to keep a daily record of tips). All tips must be reported on your individual income tax return.. You can use Form 4070. |
| 15 | Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments made in February. |
| 15 | Employers – Social security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments made in February. |
| 15 | Partnerships – File a 2022 calendar year return (Form 1065). Provide each partner with a copy of their Schedule K-1 (Form 1065), Partner\’s Share of Income, Deduc-tions, Credits, etc., or substitute Sched-ule K-1 (Form 1065), and, if applicable, Schedule K-3 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc.—International, or substitute Schedule K-3 (Form 1065). To request an automatic 6-month extension of time to file the return, file Form 7004. Then, file the return and provide each partner with a copy of their final or amended (if required) Schedule K-1 (Form 1065) and, if applicable, Schedule K-3 (Form 1065) by September 15. |
| 15 | S Corporation Election – File Form 2553 to elect to be treated as an S corporation beginning with calendar year 2023. If Form 2553 is filed late, S corporation treatment will begin with calendar year 2024. |
| 15 | S Corporations – File a 2022 calendar year income tax return (Form 1120-S) and pay any tax due. Provide each shareholder with a copy of their Schedule K-1 (Form 1120-S), Shareholder\’s Share of Income, Deductions, Credits, etc., or substitute Schedule K-1 (Form 1120-S) and, if applicable, Schedule K-3 (Form 1120-S) or substitute Schedule K-3 (Form 1120-S). To request an automatic 6-month extension of time to file the return, file Form 7004 and deposit what you estimate you owe in tax. Then, file the return; pay any tax, interest, and penalties due; and provide each shareholder with a copy of their Schedule K-1 (Form 1120-S) and, if applicable, Schedule K-3 (Form 1120-S) by September 15. |
| 31 | Electronic Filing of Forms – File copies of all the Forms W-2G you issued for 2022. This due date applies only if you electronically file. Otherwise, see February 28, earlier. The due date for giving the recipient these forms remains January 31. |
| 31 | Electronic Filing of Forms – File Forms 1097, 1098, 1099 (except a Form 1099-NEC reporting nonemployee compensation), 3921, 3922, and W-2G with the IRS. This due date applies only if you file electronically. Otherwise, see February 28, earlier. The due date for giving the recipient these forms generally remains January 31. |
| 31 | Electronic Filing of Forms – File Forms 8027 for 2022. This due date applies only if you electronically file. Otherwise, see Large food and beverage establishment em-ployers under February 28, earlier. |
| 31 | Electronic Filing of Forms – If you’re an Applicable Large Employer, file electronic Forms 1094-C and 1095-C with the IRS. For all other providers of minimum essential coverage, file electronic Forms 1094-B and 1095-B with the IRS. Otherwise, see February 28, earlier. |
April
| Day | |
|---|---|
| 10 | Employees Who Work for Tips – If you received $20 or more in tips during March, you must report them to your employer (employees are required to keep a daily record of tips). All tips must be reported on your individual income tax return.. You can use Form 4070. |
| 18 | Corporations – Deposit the first installment of estimated in-come tax for 2023. |
| 18 | Corporations – File a 2022 calendar year income tax return (Form 1120) and pay any tax due. If you want an automatic 6-month extension of time to file the return, file Form 7004 and deposit what you estimate you owe in taxes. |
| 18 | Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments made in March. |
| 18 | Employers – Social security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments made in March. |
| 18 | Household Employers – If you paid cash wages of $2,400 or more in 2022 to a house-hold employee, you must file Schedule H (Form 1040). If you’re required to file a federal income tax return (Form 1040 or Form 1040-SR), file Schedule H (Form 1040) with the return and report any household employment taxes. Report any federal unemployment (FUTA) tax on Schedule H (Form 1040) if you paid total cash wages of $1,000 or more in any calendar quarter of 2021 or 2022 to household employees. Also, report any in-come tax you withheld for your household employees. |
| 18 | Household Employers – If you paid cash wages of $2,400 or more in 2022 to a household employee, you must file Schedule H (Form 1040), Household Employment Taxes. If you’re required to file a federal income tax return (Form 1040 or Form 1040-SR), file Schedule H (Form 1040) with the return and report any household employment taxes. Re-port any federal unemployment (FUTA) tax on Schedule H (Form 1040) if you paid total cash wages of $1,000 or more in any calendar quarter of 2021 or 2022 to household employees. Also, report any income tax you withheld for your household employees. |
| 18 | Individuals – File a 2022 Form 1040 or Form 1040-SR and pay any tax due. If you want an automatic 6-month extension of time to file the return, file Form 4868 and pay what you estimate you owe in tax to avoid penal-ties and interest. For more information, see Form 4868. Then, file Form 1040 or Form 1040-SR by October 16. |
| 18 | Individuals – If you’re not paying your 2023 income tax through withholding (or won\’t pay in enough tax during the year that way), pay the first installment of your 2023 estimated tax.
You may be able to avoid having to pay estimated taxes by increasing your tax withholding. Penalties may be assessed if you do not pay enough tax through withholding and estimated tax payments or if your payments are late. You may be able to avoid the “Underpayment of Estimated Tax by Individuals Penalty” by paying at least 90% of the tax shown on the return for the tax year, or by paying 100% of the tax shown for the prior year, whichever is less. |
May
| Day | |
|---|---|
| 01 | Employers – Federal unemployment tax. Deposit the tax owed through March if more than $500. |
| 01 | Employers – Social security, Medicare, and withheld income tax. File Form 941 for the first quarter of 2023. Deposit or pay any undeposited tax under the accuracy of deposits rule. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until May 10 to file the return. |
| 10 | Employees Who Work for Tips – If you received $20 or more in tips during April, you must report them to your employer (employees are required to keep a daily record of tips). All tips must be reported on your individual income tax return.. You can use Form 4070. |
| 15 | Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments made in April. |
| 15 | Employers – Social security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments made in April. |