Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Free Income Tax Return

1040x For 2011Www Taxact Com 20112012 Income Tax ReturnsState Tax Return 2013Filing Taxes As A College StudentFiling Amended Tax Return 20121040x Fillable1040x Tax Return For Prior Year InstructionsCan You File 2012 Taxes NowHow To File Form 1040xTaxes Due 2012File 2009 Taxes Online LateHow To File Your Taxes Online For FreeState Tax Online FilingFree Income Tax PreparationVita Free Tax HelpAmendIndiana State Tax Forms 2011Do I Have To File State TaxesEfile ExtensionPreparing Form 1040xUnemployed Tax CreditForm 1040nr1040x Form And Instructions1040ez Free OnlineIrs Form 1040xHow To File An Amended Tax Return 2011Tax Form 1040xHow To File Self Employed TaxesFiling An Amended Tax ReturnWebsite Can I Efile Past Year Tax ReturnsHow To File Self Employed Taxes Step By Step1040ez TaxesTurbotax Business Federal E File 2012 For Pc DownloadSample 1040x Filled OutFree Military TaxesForm 1040x 2008Ammended ReturnForm 1040 EzBlock At Home

Free Income Tax Return

Free income tax return 5. Free income tax return   How To Get Tax Help Table of Contents Go online, use a smart phone, call or walk in to an office near you. Free income tax return Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. Free income tax return Free help with your tax return. Free income tax return    Free help in preparing your return is available nationwide from IRS-certified volunteers. Free income tax return The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Free income tax return The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Free income tax return Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Free income tax return Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Free income tax return To find the nearest VITA or TCE site, visit IRS. Free income tax return gov or call 1-800-906-9887. Free income tax return   As part of the TCE program, AARP offers the Tax-Aide counseling program. Free income tax return To find the nearest AARP Tax-Aide site, visit AARP's website at www. Free income tax return aarp. Free income tax return org/money/taxaide or call 1-888-227-7669. Free income tax return   For more information on these programs, go to IRS. Free income tax return gov and enter “VITA” in the search box. Free income tax return Internet. Free income tax return IRS. Free income tax return gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Free income tax return Apply for an Employer Identification Number (EIN). Free income tax return Go to IRS. Free income tax return gov and enter Apply for an EIN in the search box. Free income tax return Request an Electronic Filing PIN by going to IRS. Free income tax return gov and entering Electronic Filing PIN in the search box. Free income tax return Check the status of your 2013 refund with Where's My Refund? Go to IRS. Free income tax return gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free income tax return If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Free income tax return Check the status of your amended return. Free income tax return Go to IRS. Free income tax return gov and enter Where's My Amended Return in the search box. Free income tax return Download forms, instructions, and publications, including some accessible versions. Free income tax return Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Free income tax return gov or IRS2Go. Free income tax return Tax return and tax account transcripts are generally available for the current year and past three years. Free income tax return Figure your income tax withholding with the IRS Withholding Calculator on IRS. Free income tax return gov. Free income tax return Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Free income tax return Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Free income tax return gov. Free income tax return Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Free income tax return gov or IRS2Go. Free income tax return Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Free income tax return An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Free income tax return Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Free income tax return If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Free income tax return Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Free income tax return Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Free income tax return gov. Free income tax return Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Free income tax return The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Free income tax return Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Free income tax return AARP offers the Tax-Aide counseling program as part of the TCE program. Free income tax return Visit AARP's website to find the nearest Tax-Aide location. Free income tax return Research your tax questions. Free income tax return Search publications and instructions by topic or keyword. Free income tax return Read the Internal Revenue Code, regulations, or other official guidance. Free income tax return Read Internal Revenue Bulletins. Free income tax return Sign up to receive local and national tax news by email. Free income tax return Phone. Free income tax return You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Free income tax return Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Free income tax return Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Free income tax return Call to locate the nearest volunteer help site, 1-800-906-9887. Free income tax return Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Free income tax return The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Free income tax return Most VITA and TCE sites offer free electronic filing. Free income tax return Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Free income tax return Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Free income tax return Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Free income tax return The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Free income tax return If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Free income tax return Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Free income tax return Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free income tax return Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Free income tax return Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Free income tax return Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). Free income tax return You should receive your order within 10 business days. Free income tax return Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Free income tax return Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Free income tax return Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Free income tax return Call to ask tax questions, 1-800-829-1040. Free income tax return Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Free income tax return The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Free income tax return These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Free income tax return gsa. Free income tax return gov/fedrelay. Free income tax return Walk-in. Free income tax return You can find a selection of forms, publications and services — in-person, face-to-face. Free income tax return Products. Free income tax return You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Free income tax return Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Free income tax return Services. Free income tax return You can walk in to your local TAC most business days for personal, face-to-face tax help. Free income tax return An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Free income tax return If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Free income tax return No appointment is necessary—just walk in. Free income tax return Before visiting, check www. Free income tax return irs. Free income tax return gov/localcontacts for hours of operation and services provided. Free income tax return Mail. Free income tax return You can send your order for forms, instructions, and publications to the address below. Free income tax return You should receive a response within 10 business days after your request is received. Free income tax return  Internal Revenue Service 1201 N. Free income tax return Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Free income tax return    The Taxpayer Advocate Service (TAS) is your voice at the IRS. Free income tax return Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Free income tax return What can TAS do for you?    We can offer you free help with IRS problems that you can't resolve on your own. Free income tax return We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Free income tax return You face (or your business is facing) an immediate threat of adverse action. Free income tax return You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Free income tax return   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Free income tax return Here's why we can help: TAS is an independent organization within the IRS. Free income tax return Our advocates know how to work with the IRS. Free income tax return Our services are free and tailored to meet your needs. Free income tax return We have offices in every state, the District of Columbia, and Puerto Rico. Free income tax return How can you reach us?    If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. Free income tax return irs. Free income tax return gov/advocate, or call us toll-free at 1-877-777-4778. Free income tax return How else does TAS help taxpayers?    TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Free income tax return If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Free income tax return irs. Free income tax return gov/sams. Free income tax return Low Income Taxpayer Clinics. Free income tax return    Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Free income tax return Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Free income tax return Visit www. Free income tax return TaxpayerAdvocate. Free income tax return irs. Free income tax return gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Free income tax return Prev  Up  Next   Home   More Online Publications
Español

Businesses and Nonprofits

Find resources on starting and managing a business, selling to and buying from the government, exporting, importing, and much more.

The Free Income Tax Return

Free income tax return 15. Free income tax return   Selling Your Home Table of Contents Reminder Introduction Useful Items - You may want to see: Main Home Figuring Gain or LossSelling Price Amount Realized Adjusted Basis Amount of Gain or Loss Dispositions Other Than Sales Determining Basis Excluding the GainMaximum Exclusion Ownership and Use Tests Reduced Maximum Exclusion Business Use or Rental of Home Reporting the SaleSeller-financed mortgage. Free income tax return More information. Free income tax return Special SituationsException for sales to related persons. Free income tax return Recapturing (Paying Back) a Federal Mortgage Subsidy Reminder Home sold with undeducted points. Free income tax return  If you have not deducted all the points you paid to secure a mortgage on your old home, you may be able to deduct the remaining points in the year of the sale. Free income tax return See Mortgage ending early under Points in chapter 23. Free income tax return Introduction This chapter explains the tax rules that apply when you sell your main home. Free income tax return In most cases, your main home is the one in which you live most of the time. Free income tax return If you sold your main home in 2013, you may be able to exclude from income any gain up to a limit of $250,000 ($500,000 on a joint return in most cases). Free income tax return See Excluding the Gain , later. Free income tax return Generally, if you can exclude all the gain, you do not need to report the sale on your tax return. Free income tax return If you have gain that cannot be excluded, it is taxable. Free income tax return Report it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040). Free income tax return You may also have to complete Form 4797, Sales of Business Property. Free income tax return See Reporting the Sale , later. Free income tax return If you have a loss on the sale, you generally cannot deduct it on your return. Free income tax return However, you may need to report it. Free income tax return See Reporting the Sale , later. Free income tax return The following are main topics in this chapter. Free income tax return Figuring gain or loss. Free income tax return Basis. Free income tax return Excluding the gain. Free income tax return Ownership and use tests. Free income tax return Reporting the sale. Free income tax return Other topics include the following. Free income tax return Business use or rental of home. Free income tax return Recapturing a federal mortgage subsidy. Free income tax return Useful Items - You may want to see: Publication 523 Selling Your Home 530 Tax Information for Homeowners 547 Casualties, Disasters, and Thefts Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 982 Reduction of Tax Attributes Due to Discharge of Indebtedness 8828 Recapture of Federal Mortgage Subsidy 8949 Sales and Other Dispositions of Capital Assets Main Home This section explains the term “main home. Free income tax return ” Usually, the home you live in most of the time is your main home and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. Free income tax return To exclude gain under the rules of this chapter, you in most cases must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. Free income tax return Land. Free income tax return   If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. Free income tax return However, if you sell vacant land used as part of your main home and that is adjacent to it, you may be able to exclude the gain from the sale under certain circumstances. Free income tax return See Vacant land under Main Home in Publication 523 for more information. Free income tax return Example. Free income tax return You buy a piece of land and move your main home to it. Free income tax return Then you sell the land on which your main home was located. Free income tax return This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. Free income tax return More than one home. Free income tax return   If you have more than one home, you can exclude gain only from the sale of your main home. Free income tax return You must include in income gain from the sale of any other home. Free income tax return 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 during the year. Free income tax return Example 1. Free income tax return You own two homes, one in New York and one in Florida. Free income tax return From 2009 through 2013, you live in the New York home for 7 months and in the Florida residence for 5 months of each year. Free income tax return In the absence of facts and circumstances indicating otherwise, the New York home is your main home. Free income tax return You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. Free income tax return Example 2. Free income tax return You own a house, but you live in another house that you rent. Free income tax return The rented house is your main home. Free income tax return Example 3. Free income tax return You own two homes, one in Virginia and one in New Hampshire. Free income tax return In 2009 and 2010, you lived in the Virginia home. Free income tax return In 2011 and 2012, you lived in the New Hampshire home. Free income tax return In 2013, you lived again in the Virginia home. Free income tax return Your main home in 2009, 2010, and 2013 is the Virginia home. Free income tax return Your main home in 2011 and 2012 is the New Hampshire home. Free income tax return You would be eligible to exclude gain from the sale of either home (but not both) in 2013. Free income tax return Property used partly as your main home. Free income tax return   If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. Free income tax return For details, see Business Use or Rental of Home , later. Free income tax return Figuring Gain or Loss To figure the gain or loss on the sale of your main home, you must know the selling price, the amount realized, and the adjusted basis. Free income tax return Subtract the adjusted basis from the amount realized to get your gain or loss. Free income tax return     Selling price     − Selling expenses       Amount realized       Amount realized     − Adjusted basis       Gain or loss   Selling Price The selling price is the total amount you receive for your home. Free income tax return It includes money and the fair market value of any other property or any other services you receive and all notes, mortgages or other debts assumed by the buyer as part of the sale. Free income tax return Payment by employer. Free income tax return   You may have to sell your home because of a job transfer. Free income tax return If your employer pays you for a loss on the sale or for your selling expenses, do not include the payment as part of the selling price. Free income tax return Your employer will include it as wages in box 1 of your Form W-2, and you will include it in your income on Form 1040, line 7. Free income tax return Option to buy. Free income tax return   If you grant an option to buy your home and the option is exercised, add the amount you receive for the option to the selling price of your home. Free income tax return If the option is not exercised, you must report the amount as ordinary income in the year the option expires. Free income tax return Report this amount on Form 1040, line 21. Free income tax return Form 1099-S. Free income tax return   If you received Form 1099-S, Proceeds From Real Estate Transactions, box 2 (Gross proceeds) should show the total amount you received for your home. Free income tax return   However, box 2 will not include the fair market value of any services or property other than cash or notes you received or will receive. Free income tax return Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. Free income tax return Amount Realized The amount realized is the selling price minus selling expenses. Free income tax return Selling expenses. Free income tax return   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. Free income tax return ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. Free income tax return This adjusted basis must be determined before you can figure gain or loss on the sale of your home. Free income tax return For information on how to figure your home's adjusted basis, see Determining Basis , later. Free income tax return Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. Free income tax return Gain on sale. Free income tax return   If the amount realized is more than the adjusted basis, the difference is a gain and, except for any part you can exclude, in most cases is taxable. Free income tax return Loss on sale. Free income tax return   If the amount realized is less than the adjusted basis, the difference is a loss. Free income tax return A loss on the sale of your main home cannot be deducted. Free income tax return Jointly owned home. Free income tax return   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. Free income tax return Separate returns. Free income tax return   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. Free income tax return Your ownership interest is generally determined by state law. Free income tax return Joint owners not married. Free income tax return   If you and a joint owner other than your spouse sell your jointly owned home, each of you must figure your own gain or loss according to your ownership interest in the home. Free income tax return Each of you applies the rules discussed in this chapter on an individual basis. Free income tax return Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. Free income tax return Foreclosure or repossession. Free income tax return   If your home was foreclosed on or repossessed, you have a disposition. Free income tax return See Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments, to determine if you have ordinary income, gain, or loss. Free income tax return Abandonment. Free income tax return   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. Free income tax return Trading (exchanging) homes. Free income tax return   If you trade your old home for another home, treat the trade as a sale and a purchase. Free income tax return Example. Free income tax return You owned and lived in a home with an adjusted basis of $41,000. Free income tax return A real estate dealer accepted your old home as a trade-in and allowed you $50,000 toward a new home priced at $80,000. Free income tax return This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 – $41,000). Free income tax return If the dealer had allowed you $27,000 and assumed your unpaid mortgage of $23,000 on your old home, your sales price would still be $50,000 (the $27,000 trade-in allowed plus the $23,000 mortgage assumed). Free income tax return Transfer to spouse. Free income tax return   If you transfer your home to your spouse or you transfer it to your former spouse incident to your divorce, you in most cases have no gain or loss. Free income tax return This is true even if you receive cash or other consideration for the home. Free income tax return As a result, the rules in this chapter do not apply. Free income tax return More information. Free income tax return   If you need more information, see Transfer to spouse in Publication 523 and Property Settlements in Publication 504, Divorced or Separated Individuals. Free income tax return Involuntary conversion. Free income tax return   You have a disposition when your home is destroyed or condemned and you receive other property or money in payment, such as insurance or a condemnation award. Free income tax return This is treated as a sale and you may be able to exclude all or part of any gain from the destruction or condemnation of your home, as explained later under Special Situations . Free income tax return Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. Free income tax return Your basis in your home is determined by how you got the home. Free income tax return Generally, your basis is its cost if you bought it or built it. Free income tax return If you got it in some other way (inheritance, gift, etc. Free income tax return ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. Free income tax return While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. Free income tax return The result of these adjustments is your home's adjusted basis, which is used to figure gain or loss on the sale of your home. Free income tax return See Adjusted Basis , later. Free income tax return You can find more information on basis and adjusted basis in chapter 13 of this publication and in Publication 523. Free income tax return Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. Free income tax return Purchase. Free income tax return   If you bought your home, your basis is its cost to you. Free income tax return This includes the purchase price and certain settlement or closing costs. Free income tax return In most cases, your purchase price includes your down payment and any debt, such as a first or second mortgage or notes you gave the seller in payment for the home. Free income tax return If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed in Publication 523. Free income tax return Settlement fees or closing costs. Free income tax return   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. Free income tax return You can include in your basis some of the settlement fees and closing costs you paid for buying the home, but not the fees and costs for getting a mortgage loan. Free income tax return A fee paid for buying the home is any fee you would have had to pay even if you paid cash for the home (that is, without the need for financing). Free income tax return    Chapter 13 lists some of the settlement fees and closing costs that you can include in the basis of property, including your home. Free income tax return It also lists some settlement costs that cannot be included in basis. Free income tax return   Also see Publication 523 for additional items and a discussion of basis other than cost. Free income tax return Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. Free income tax return To figure your adjusted basis, you can use Worksheet 1 in Publication 523. Free income tax return Do not use Worksheet 1 if you acquired an interest in your home from a decedent who died in 2010 and whose executor filed Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent. Free income tax return Increases to basis. Free income tax return   These include the following. Free income tax return Additions and other improvements that have a useful life of more than 1 year. Free income tax return Special assessments for local improvements. Free income tax return Amounts you spent after a casualty to restore damaged property. Free income tax return Improvements. Free income tax return   These add to the value of your home, prolong its useful life, or adapt it to new uses. Free income tax return You add the cost of additions and other improvements to the basis of your property. Free income tax return   For example, putting a recreation room or another bathroom in your unfinished basement, putting up a new fence, putting in new plumbing or wiring, putting on a new roof, or paving your unpaved driveway are improvements. Free income tax return An addition to your house, such as a new deck, a sunroom, or a new garage, is also an improvement. Free income tax return Repairs. Free income tax return   These maintain your home in good condition but do not add to its value or prolong its life. Free income tax return You do not add their cost to the basis of your property. Free income tax return   Examples of repairs include repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes. Free income tax return Decreases to basis. Free income tax return   These include the following. Free income tax return Discharge of qualified principal residence indebtedness that was excluded from income. Free income tax return Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. Free income tax return For details, see Publication 4681. Free income tax return Gain you postponed from the sale of a previous home before May 7, 1997. Free income tax return Deductible casualty losses. Free income tax return Insurance payments you received or expect to receive for casualty losses. Free income tax return Payments you received for granting an easement or right-of-way. Free income tax return Depreciation allowed or allowable if you used your home for business or rental purposes. Free income tax return Energy-related credits allowed for expenditures made on the residence. Free income tax return (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. Free income tax return ) Adoption credit you claimed for improvements added to the basis of your home. Free income tax return Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. Free income tax return Energy conservation subsidy excluded from your gross income because you received it (directly or indirectly) from a public utility after 1992 to buy or install any energy conservation measure. Free income tax return An energy conservation measure is an installation or modification primarily designed either to reduce consumption of electricity or natural gas or to improve the management of energy demand for a home. Free income tax return District of Columbia first-time homebuyer credit (allowed on the purchase of a principal residence in the District of Columbia beginning on August 5, 1997 and before January 1, 2012). Free income tax return General sales taxes (allowed beginning 2004 and ending before 2014) claimed as an itemized deduction on Schedule A (Form 1040) that were imposed on the purchase of personal property, such as a houseboat used as your home or a mobile home. Free income tax return Discharges of qualified principal residence indebtedness. Free income tax return   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. Free income tax return This exclusion applies to discharges made after 2006 and before 2014. Free income tax return If you choose to exclude this income, you must reduce (but not below zero) the basis of the principal residence by the amount excluded from your gross income. Free income tax return   File Form 982 with your tax return. Free income tax return See the form's instructions for detailed information. Free income tax return Recordkeeping. Free income tax return You should keep records to prove your home's adjusted basis. Free income tax return Ordinarily, you must keep records for 3 years after the due date for filing your return for the tax year in which you sold your home. Free income tax return But if you sold a home before May 7, 1997, and postponed tax on any gain, the basis of that home affects the basis of the new home you bought. Free income tax return Keep records proving the basis of both homes as long as they are needed for tax purposes. Free income tax return The records you should keep include: Proof of the home's purchase price and purchase expenses, Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis, Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain, Any Form 982 you filed to report any discharge of qualified principal residence indebtedness, Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997, and Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations. Free income tax return Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. Free income tax return This means that, if you qualify, you will not have to pay tax on the gain up to the limit described under Maximum Exclusion , next. Free income tax return To qualify, you must meet the ownership and use tests described later. Free income tax return You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. Free income tax return You can use Worksheet 2 in Publication 523 to figure the amount of your exclusion and your taxable gain, if any. Free income tax return If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. Free income tax return See Publication 505, Tax Withholding and Estimated Tax. Free income tax return Maximum Exclusion You can exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. Free income tax return You meet the ownership test. Free income tax return You meet the use test. Free income tax return During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Free income tax return For details on gain allocated to periods of nonqualified use, see Periods of nonqualified use , later. Free income tax return You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . Free income tax return Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Free income tax return This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). Free income tax return Exception. Free income tax return   If you owned and lived in the property as your main home for less than 2 years, you can still claim an exclusion in some cases. Free income tax return However, the maximum amount you may be able to exclude will be reduced. Free income tax return See Reduced Maximum Exclusion , later. Free income tax return Example 1—home owned and occupied for at least 2 years. Free income tax return Mya bought and moved into her main home in September 2011. Free income tax return She sold the home at a gain in October 2013. Free income tax return During the 5-year period ending on the date of sale in October 2013, she owned and lived in the home for more than 2 years. Free income tax return She meets the ownership and use tests. Free income tax return Example 2—ownership test met but use test not met. Free income tax return Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. Free income tax return He later sold the home for a gain. Free income tax return He owned the home during the entire 5-year period ending on the date of sale. Free income tax return He meets the ownership test but not the use test. Free income tax return He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). Free income tax return Period of Ownership and Use The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time. Free income tax return You meet the tests if you can show that you owned and lived in the property as your main home for either 24 full months or 730 days (365 × 2) during the 5-year period ending on the date of sale. Free income tax return Temporary absence. Free income tax return   Short temporary absences for vacations or other seasonal absences, even if you rent out the property during the absences, are counted as periods of use. Free income tax return The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. Free income tax return Example 1. Free income tax return David Johnson, who is single, bought and moved into his home on February 1, 2011. Free income tax return Each year during 2011 and 2012, David left his home for a 2-month summer vacation. Free income tax return David sold the house on March 1, 2013. Free income tax return Although the total time David used his home is less than 2 years (21 months), he meets the requirement and may exclude gain. Free income tax return The 2-month vacations are short temporary absences and are counted as periods of use in determining whether David used the home for the required 2 years. Free income tax return Example 2. Free income tax return Professor Paul Beard, who is single, bought and moved into a house on August 18, 2010. Free income tax return He lived in it as his main home continuously until January 5, 2012, when he went abroad for a 1-year sabbatical leave. Free income tax return On February 6, 2013, 1 month after returning from the leave, Paul sold the house at a gain. Free income tax return Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. Free income tax return He cannot exclude any part of his gain, because he did not use the residence for the required 2 years. Free income tax return Ownership and use tests met at different times. Free income tax return   You can meet the ownership and use tests during different 2-year periods. Free income tax return However, you must meet both tests during the 5-year period ending on the date of the sale. Free income tax return Example. Free income tax return Beginning in 2002, Helen Jones lived in a rented apartment. Free income tax return The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. Free income tax return In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. Free income tax return On July 12, 2013, while still living in her daughter's home, she sold her condominium. Free income tax return Helen can exclude gain on the sale of her condominium because she met the ownership and use tests during the 5-year period from July 13, 2008, to July 12, 2013, the date she sold the condominium. Free income tax return She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). Free income tax return She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). Free income tax return The time Helen lived in her daughter's home during the 5-year period can be counted toward her period of ownership, and the time she lived in her rented apartment during the 5-year period can be counted toward her period of use. Free income tax return Cooperative apartment. Free income tax return   If you sold stock as a tenant-stockholder in a cooperative housing corporation, the ownership and use tests are met if, during the 5-year period ending on the date of sale, you: Owned the stock for at least 2 years, and Lived in the house or apartment that the stock entitles you to occupy as your main home for at least 2 years. Free income tax return Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. Free income tax return Exception for individuals with a disability. Free income tax return   There is an exception to the use test if: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year during the 5-year period before the sale of your home. Free income tax return Under this exception, you are considered to live in your home during any time within the 5-year period that you own the home and live in a facility (including a nursing home) licensed by a state or political subdivision to care for persons in your condition. Free income tax return If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. Free income tax return Previous home destroyed or condemned. Free income tax return   For the ownership and use tests, you add the time you owned and lived in a previous home that was destroyed or condemned to the time you owned and lived in the replacement home on whose sale you wish to exclude gain. Free income tax return This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home. Free income tax return Otherwise, you must have owned and lived in the same home for 2 of the 5 years before the sale to qualify for the exclusion. Free income tax return Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Free income tax return   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on “qualified official extended duty” as a member of the uniformed services or Foreign Service of the United States, or as an employee of the intelligence community. Free income tax return You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve outside the United States either as an employee of the Peace Corps on "qualified official extended duty" or as an enrolled volunteer or volunteer leader of the Peace Corps. Free income tax return This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. Free income tax return   If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain. Free income tax return For more information about the suspension of the 5-year test period, see Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps in Publication 523. Free income tax return Married Persons If you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use tests, you can exclude up to $250,000 of the gain. Free income tax return (But see Special rules for joint returns , next. Free income tax return ) Special rules for joint returns. Free income tax return   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Free income tax return You are married and file a joint return for the year. Free income tax return Either you or your spouse meets the ownership test. Free income tax return Both you and your spouse meet the use test. Free income tax return During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home. Free income tax return If either spouse does not satisfy all these requirements, the maximum exclusion that can be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. Free income tax return For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. Free income tax return Example 1—one spouse sells a home. Free income tax return Emily sells her home in June 2013 for a gain of $300,000. Free income tax return She marries Jamie later in the year. Free income tax return She meets the ownership and use tests, but Jamie does not. Free income tax return Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. Free income tax return The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. Free income tax return Example 2—each spouse sells a home. Free income tax return The facts are the same as in Example 1 except that Jamie also sells a home in 2013 for a gain of $200,000 before he marries Emily. Free income tax return He meets the ownership and use tests on his home, but Emily does not. Free income tax return Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. Free income tax return However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. Free income tax return Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. Free income tax return The $500,000 maximum exclusion for certain joint returns does not apply because Emily and Jamie do not both meet the use test for the same home. Free income tax return Sale of main home by surviving spouse. Free income tax return   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. Free income tax return   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. Free income tax return The sale or exchange took place after 2008. Free income tax return The sale or exchange took place no more than 2 years after the date of death of your spouse. Free income tax return You have not remarried. Free income tax return You and your spouse met the use test at the time of your spouse's death. Free income tax return You or your spouse met the ownership test at the time of your spouse's death. Free income tax return Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. Free income tax return Example. Free income tax return   Harry owned and used a house as his main home since 2009. Free income tax return Harry and Wilma married on July 1, 2013, and from that date they use Harry's house as their main home. Free income tax return Harry died on August 15, 2013, and Wilma inherited the property. Free income tax return Wilma sold the property on September 3, 2013, at which time she had not remarried. Free income tax return Although Wilma owned and used the house for less than 2 years, Wilma is considered to have satisfied the ownership and use tests because her period of ownership and use includes the period that Harry owned and used the property before death. Free income tax return Home transferred from spouse. Free income tax return   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. Free income tax return Use of home after divorce. Free income tax return   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. Free income tax return Reduced Maximum Exclusion If you fail to meet the requirements to qualify for the $250,000 or $500,000 exclusion, you may still qualify for a reduced exclusion. Free income tax return This applies to those who: Fail to meet the ownership and use tests, or Have used the exclusion within 2 years of selling their current home. Free income tax return In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. Free income tax return A change in place of employment. Free income tax return Health. Free income tax return Unforeseen circumstances. Free income tax return Unforeseen circumstances. Free income tax return   The sale of your main home is because of an unforeseen circumstance if your primary reason for the sale is the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home. Free income tax return   See Publication 523 for more information and to use Worksheet 3 to figure your reduced maximum exclusion. Free income tax return Business Use or Rental of Home You may be able to exclude gain from the sale of a home you have used for business or to produce rental income. Free income tax return But you must meet the ownership and use tests. Free income tax return Periods of nonqualified use. Free income tax return   In most cases, gain from the sale or exchange of your main home will not qualify for the exclusion to the extent that the gains are allocated to periods of nonqualified use. Free income tax return Nonqualified use is any period after 2008 during which neither you nor your spouse (or your former spouse) used the property as a main home with the following exceptions. Free income tax return Exceptions. Free income tax return   A period of nonqualified use does not include: Any portion of the 5-year period ending on the date of the sale or exchange after the last date you (or your spouse) use the property as a main home; Any period (not to exceed an aggregate period of 10 years) during which you (or your spouse) are serving on qualified official extended duty: As a member of the uniformed services; As a member of the Foreign Service of the United States; or As an employee of the intelligence community; and Any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the IRS. Free income tax return The gain resulting from the sale of the property is allocated between qualified and nonqualified use periods based on the amount of time the property was held for qualified and nonqualified use. Free income tax return Gain from the sale or exchange of a main home allocable to periods of qualified use will continue to qualify for the exclusion for the sale of your main home. Free income tax return Gain from the sale or exchange of property allocable to nonqualified use will not qualify for the exclusion. Free income tax return Calculation. Free income tax return   To figure the portion of the gain allocated to the period of nonqualified use, multiply the gain by the following fraction:   Total nonqualified use during the period of ownership after 2008      Total period of ownership     This calculation can be found in Worksheet 2, line 10, in Publication 523. Free income tax return Example 1. Free income tax return On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. Free income tax return She moved in on that date and lived in it until May 31, 2009, when she moved out of the house and put it up for rent. Free income tax return The house was rented from June 1, 2009, to March 31, 2011. Free income tax return Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. Free income tax return Amy moved back into the house on April 1, 2011, and lived there until she sold it on January 31, 2013, for a gain of $200,000. Free income tax return During the 5-year period ending on the date of the sale (January 31, 2008-January 31, 2013), Amy owned and lived in the house for more than 2 years as shown in the following table. Free income tax return Five Year Period Used as  Home Used as  Rental 1/31/08 – 5/31/09 16 months       6/1/09 – 3/31/11   22 months 4/1/11 – 1/31/13 22 months         38 months 22 months During the period Amy owned the house (2,080 days), her period of nonqualified use was 668 days. Free income tax return Amy divides 668 by 2,080 and obtains a decimal (rounded to at least three decimal places) of 0. Free income tax return 321. Free income tax return To figure her gain attributable to the period of nonqualified use, she multiplies $190,000 (the gain not attributable to the $10,000 depreciation deduction) by 0. Free income tax return 321. Free income tax return Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain. Free income tax return Example 2. Free income tax return William owned and used a house as his main home from 2007 through 2010. Free income tax return On January 1, 2011, he moved to another state. Free income tax return He rented his house from that date until April 30, 2013, when he sold it. Free income tax return During the 5-year period ending on the date of sale (May 1, 2008-April 30, 2013), William owned and lived in the house for more than 2 years. Free income tax return He must report the sale on Form 4797 because it was rental property at the time of sale. Free income tax return Because the period of nonqualified use does not include any part of the 5-year period after the last date William lived in the house, he has no period of nonqualified use. Free income tax return Because he met the ownership and use tests, he can exclude gain up to $250,000. Free income tax return However, he cannot exclude the part of the gain equal to the depreciation he claimed or could have claimed for renting the house, as explained next. Free income tax return Depreciation after May 6, 1997. Free income tax return   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. Free income tax return If you can show by adequate records or other evidence that the depreciation allowed was less than the amount allowable, then you may limit the amount of gain recognized to the depreciation allowed. Free income tax return See Publication 544 for more information. Free income tax return Property used partly for business or rental. Free income tax return   If you used property partly as a home and partly for business or to produce rental income, see Publication 523. Free income tax return Reporting the Sale Do not report the 2013 sale of your main home on your tax return unless: You have a gain and do not qualify to exclude all of it, You have a gain and choose not to exclude it, or You received Form 1099-S. Free income tax return If any of these conditions apply, report the entire gain or loss. Free income tax return For details on how to report the gain or loss, see the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949. Free income tax return If you used the home for business or to produce rental income, you may have to use Form 4797 to report the sale of the business or rental part (or the sale of the entire property if used entirely for business or rental). Free income tax return See Business Use or Rental of Home in Publication 523 and the Instructions for Form 4797. Free income tax return Installment sale. Free income tax return    Some sales are made under arrangements that provide for part or all of the selling price to be paid in a later year. Free income tax return These sales are called “installment sales. Free income tax return ” If you finance the buyer's purchase of your home yourself instead of having the buyer get a loan or mortgage from a bank, you probably have an installment sale. Free income tax return You may be able to report the part of the gain you cannot exclude on the installment basis. Free income tax return    Use Form 6252, Installment Sale Income, to report the sale. Free income tax return Enter your exclusion on line 15 of Form 6252. Free income tax return Seller-financed mortgage. Free income tax return   If you sell your home and hold a note, mortgage, or other financial agreement, the payments you receive in most cases consist of both interest and principal. Free income tax return You must separately report as interest income the interest you receive as part of each payment. Free income tax return If the buyer of your home uses the property as a main or second home, you must also report the name, address, and social security number (SSN) of the buyer on line 1 of Schedule B (Form 1040A or 1040). Free income tax return The buyer must give you his or her SSN, and you must give the buyer your SSN. Free income tax return Failure to meet these requirements may result in a $50 penalty for each failure. Free income tax return If either you or the buyer does not have and is not eligible to get an SSN, see Social Security Number in chapter 1. Free income tax return More information. Free income tax return   For more information on installment sales, see Publication 537, Installment Sales. Free income tax return Special Situations The situations that follow may affect your exclusion. Free income tax return Sale of home acquired in a like-kind exchange. Free income tax return   You cannot claim the exclusion if: You acquired your home in a like-kind exchange (also known as a section 1031 exchange), or your basis in your home is determined by reference to the basis of the home in the hands of the person who acquired the property in a like-kind exchange (for example, you received the home from that person as a gift), and You sold the home during the 5-year period beginning with the date your home was acquired in the like-kind exchange. Free income tax return Gain from a like-kind exchange is not taxable at the time of the exchange. Free income tax return This means that gain will not be taxed until you sell or otherwise dispose of the property you receive. Free income tax return To defer gain from a like-kind exchange, you must have exchanged business or investment property for business or investment property of a like kind. Free income tax return For more information about like-kind exchanges, see Publication 544, Sales and Other Dispositions of Assets. Free income tax return Home relinquished in a like-kind exchange. Free income tax return   If you use your main home partly for business or rental purposes and then exchange the home for another property, see Publication 523. Free income tax return Expatriates. Free income tax return   You cannot claim the exclusion if the expatriation tax applies to you. Free income tax return The expatriation tax applies to certain U. Free income tax return S. Free income tax return citizens who have renounced their citizenship (and to certain long-term residents who have ended their residency). Free income tax return For more information about the expatriation tax, see Expatriation Tax in chapter 4 of Publication 519, U. Free income tax return S. Free income tax return Tax Guide for Aliens. Free income tax return Home destroyed or condemned. Free income tax return   If your home was destroyed or condemned, any gain (for example, because of insurance proceeds you received) qualifies for the exclusion. Free income tax return   Any part of the gain that cannot be excluded (because it is more than the maximum exclusion) can be postponed under the rules explained in: Publication 547, in the case of a home that was destroyed, or Publication 544, chapter 1, in the case of a home that was condemned. Free income tax return Sale of remainder interest. Free income tax return   Subject to the other rules in this chapter, you can choose to exclude gain from the sale of a remainder interest in your home. Free income tax return If you make this choice, you cannot choose to exclude gain from your sale of any other interest in the home that you sell separately. Free income tax return Exception for sales to related persons. Free income tax return   You cannot exclude gain from the sale of a remainder interest in your home to a related person. Free income tax return Related persons include your brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Free income tax return ), and lineal descendants (children, grandchildren, etc. Free income tax return ). Free income tax return Related persons also include certain corporations, partnerships, trusts, and exempt organizations. Free income tax return Recapturing (Paying Back) a Federal Mortgage Subsidy If you financed your home under a federally subsidized program (loans from tax-exempt qualified mortgage bonds or loans with mortgage credit certificates), you may have to recapture all or part of the benefit you received from that program when you sell or otherwise dispose of your home. Free income tax return You recapture the benefit by increasing your federal income tax for the year of the sale. Free income tax return You may have to pay this recapture tax even if you can exclude your gain from income under the rules discussed earlier; that exclusion does not affect the recapture tax. Free income tax return Loans subject to recapture rules. Free income tax return   The recapture applies to loans that: Came from the proceeds of qualified mortgage bonds, or Were based on mortgage credit certificates. Free income tax return The recapture also applies to assumptions of these loans. Free income tax return When recapture applies. Free income tax return   Recapture of the federal mortgage subsidy applies only if you meet both of the following conditions. Free income tax return You sell or otherwise dispose of your home at a gain within the first 9 years after the date you close your mortgage loan. Free income tax return Your income for the year of disposition is more than that year's adjusted qualifying income for your family size for that year (related to the income requirements a person must meet to qualify for the federally subsidized program). Free income tax return When recapture does not apply. Free income tax return   Recapture does not apply in any of the following situations. Free income tax return Your mortgage loan was a qualified home improvement loan (QHIL) of not more than $15,000 used for alterations, repairs, and improvements that protect or improve the basic livability or energy efficiency of your home. Free income tax return Your mortgage loan was a QHIL of not more than $150,000 in the case of a QHIL used to repair damage from Hurricane Katrina to homes in the hurricane disaster area; a QHIL funded by a qualified mortgage bond that is a qualified Gulf Opportunity Zone Bond; or a QHIL for an owner-occupied home in the Gulf Opportunity Zone (GO Zone), Rita GO Zone, or Wilma GO Zone. Free income tax return For more information, see Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma. Free income tax return Also see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. Free income tax return The home is disposed of as a result of your death. Free income tax return You dispose of the home more than 9 years after the date you closed your mortgage loan. Free income tax return You transfer the home to your spouse, or to your former spouse incident to a divorce, where no gain is included in your income. Free income tax return You dispose of the home at a loss. Free income tax return Your home is destroyed by a casualty, and you replace it on its original site within 2 years after the end of the tax year when the destruction happened. Free income tax return The replacement period is extended for main homes destroyed in a federally declared disaster area, a Midwestern disaster area, the Kansas disaster area, and the Hurricane Katrina disaster area. Free income tax return For more information, see Replacement Period in Publication 547. Free income tax return You refinance your mortgage loan (unless you later meet the conditions listed previously under When recapture applies ). Free income tax return Notice of amounts. Free income tax return   At or near the time of settlement of your mortgage loan, you should receive a notice that provides the federally subsidized amount and other information you will need to figure your recapture tax. Free income tax return How to figure and report the recapture. Free income tax return    The recapture tax is figured on Form 8828. Free income tax return If you sell your home and your mortgage is subject to recapture rules, you must file Form 8828 even if you do not owe a recapture tax. Free income tax return Attach Form 8828 to your Form 1040. Free income tax return For more information, see Form 8828 and its instructions. Free income tax return Prev  Up  Next   Home   More Online Publications