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H&r Block Amended Return 2013

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H&r Block Amended Return 2013

H&r block amended return 2013 1. H&r block amended return 2013   Definitions You Need To Know Table of Contents Other options. H&r block amended return 2013 Exception. H&r block amended return 2013 Certain terms used in this publication are defined below. H&r block amended return 2013 The same term used in another publication may have a slightly different meaning. H&r block amended return 2013 Annual additions. H&r block amended return 2013   Annual additions are the total of all your contributions in a year, employee contributions (not including rollovers), and forfeitures allocated to a participant's account. H&r block amended return 2013 Annual benefits. H&r block amended return 2013   Annual benefits are the benefits to be paid yearly in the form of a straight life annuity (with no extra benefits) under a plan to which employees do not contribute and under which no rollover contributions are made. H&r block amended return 2013 Business. H&r block amended return 2013   A business is an activity in which a profit motive is present and economic activity is involved. H&r block amended return 2013 Service as a newspaper carrier under age 18 or as a public official is not a business. H&r block amended return 2013 Common-law employee. H&r block amended return 2013   A common-law employee is any individual who, under common law, would have the status of an employee. H&r block amended return 2013 A leased employee can also be a common-law employee. H&r block amended return 2013   A common-law employee is a person who performs services for an employer who has the right to control and direct the results of the work and the way in which it is done. H&r block amended return 2013 For example, the employer: Provides the employee's tools, materials, and workplace, and Can fire the employee. H&r block amended return 2013   Common-law employees are not self-employed and cannot set up retirement plans for income from their work, even if that income is self-employment income for social security tax purposes. H&r block amended return 2013 For example, common-law employees who are ministers, members of religious orders, full-time insurance salespeople, and U. H&r block amended return 2013 S. H&r block amended return 2013 citizens employed in the United States by foreign governments cannot set up retirement plans for their earnings from those employments, even though their earnings are treated as self-employment income. H&r block amended return 2013   However, an individual may be a common-law employee and a self-employed person as well. H&r block amended return 2013 For example, an attorney can be a corporate common-law employee during regular working hours and also practice law in the evening as a self-employed person. H&r block amended return 2013 In another example, a minister employed by a congregation for a salary is a common-law employee even though the salary is treated as self-employment income for social security tax purposes. H&r block amended return 2013 However, fees reported on Schedule C (Form 1040), Profit or Loss From Business, for performing marriages, baptisms, and other personal services are self-employment earnings for qualified plan purposes. H&r block amended return 2013 Compensation. H&r block amended return 2013   Compensation for plan allocations is the pay a participant received from you for personal services for a year. H&r block amended return 2013 You can generally define compensation as including all the following payments. H&r block amended return 2013 Wages and salaries. H&r block amended return 2013 Fees for professional services. H&r block amended return 2013 Other amounts received (cash or noncash) for personal services actually rendered by an employee, including, but not limited to, the following items. H&r block amended return 2013 Commissions and tips. H&r block amended return 2013 Fringe benefits. H&r block amended return 2013 Bonuses. H&r block amended return 2013   For a self-employed individual, compensation means the earned income, discussed later, of that individual. H&r block amended return 2013   Compensation generally includes amounts deferred in the following employee benefit plans. H&r block amended return 2013 These amounts are elective deferrals. H&r block amended return 2013 Qualified cash or deferred arrangement (section 401(k) plan). H&r block amended return 2013 Salary reduction agreement to contribute to a tax-sheltered annuity (section 403(b) plan), a SIMPLE IRA plan, or a SARSEP. H&r block amended return 2013 Section 457 nonqualified deferred compensation plan. H&r block amended return 2013 Section 125 cafeteria plan. H&r block amended return 2013   However, an employer can choose to exclude elective deferrals under the above plans from the definition of compensation. H&r block amended return 2013 The limit on elective deferrals is discussed in chapter 2 under Salary Reduction Simplified Employee Pension (SARSEP) and in chapter 4. H&r block amended return 2013 Other options. H&r block amended return 2013   In figuring the compensation of a participant, you can treat any of the following amounts as the employee's compensation. H&r block amended return 2013 The employee's wages as defined for income tax withholding purposes. H&r block amended return 2013 The employee's wages you report in box 1 of Form W-2, Wage and Tax Statement. H&r block amended return 2013 The employee's social security wages (including elective deferrals). H&r block amended return 2013   Compensation generally cannot include either of the following items. H&r block amended return 2013 Nontaxable reimbursements or other expense allowances. H&r block amended return 2013 Deferred compensation (other than elective deferrals). H&r block amended return 2013 SIMPLE plans. H&r block amended return 2013   A special definition of compensation applies for SIMPLE plans. H&r block amended return 2013 See chapter 3. H&r block amended return 2013 Contribution. H&r block amended return 2013   A contribution is an amount you pay into a plan for all those participating in the plan, including self-employed individuals. H&r block amended return 2013 Limits apply to how much, under the contribution formula of the plan, can be contributed each year for a participant. H&r block amended return 2013 Deduction. H&r block amended return 2013   A deduction is the plan contributions you can subtract from gross income on your federal income tax return. H&r block amended return 2013 Limits apply to the amount deductible. H&r block amended return 2013 Earned income. H&r block amended return 2013   Earned income is net earnings from self-employment, discussed later, from a business in which your services materially helped to produce the income. H&r block amended return 2013   You can also have earned income from property your personal efforts helped create, such as royalties from your books or inventions. H&r block amended return 2013 Earned income includes net earnings from selling or otherwise disposing of the property, but it does not include capital gains. H&r block amended return 2013 It includes income from licensing the use of property other than goodwill. H&r block amended return 2013   Earned income includes amounts received for services by self-employed members of recognized religious sects opposed to social security benefits who are exempt from self-employment tax. H&r block amended return 2013   If you have more than one business, but only one has a retirement plan, only the earned income from that business is considered for that plan. H&r block amended return 2013 Employer. H&r block amended return 2013   An employer is generally any person for whom an individual performs or did perform any service, of whatever nature, as an employee. H&r block amended return 2013 A sole proprietor is treated as his or her own employer for retirement plan purposes. H&r block amended return 2013 However, a partner is not an employer for retirement plan purposes. H&r block amended return 2013 Instead, the partnership is treated as the employer of each partner. H&r block amended return 2013 Highly compensated employee. H&r block amended return 2013   A highly compensated employee is an individual who: Owned more than 5% of the interest in your business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or For the preceding year, received compensation from you of more than $115,000 (if the preceding year is 2012, 2013, or 2014) and, if you so choose, was in the top 20% of employees when ranked by compensation. H&r block amended return 2013 Leased employee. H&r block amended return 2013   A leased employee who is not your common-law employee must generally be treated as your employee for retirement plan purposes if he or she does all the following. H&r block amended return 2013 Provides services to you under an agreement between you and a leasing organization. H&r block amended return 2013 Has performed services for you (or for you and related persons) substantially full time for at least 1 year. H&r block amended return 2013 Performs services under your primary direction or control. H&r block amended return 2013 Exception. H&r block amended return 2013   A leased employee is not treated as your employee if all the following conditions are met. H&r block amended return 2013 Leased employees are not more than 20% of your non-highly compensated work force. H&r block amended return 2013 The employee is covered under the leasing organization's qualified pension plan. H&r block amended return 2013 The leasing organization's plan is a money purchase pension plan that has all the following provisions. H&r block amended return 2013 Immediate participation. H&r block amended return 2013 (This requirement does not apply to any individual whose compensation from the leasing organization in each plan year during the 4-year period ending with the plan year is less than $1,000. H&r block amended return 2013 ) Full and immediate vesting. H&r block amended return 2013 A nonintegrated employer contribution rate of at least 10% of compensation for each participant. H&r block amended return 2013 However, if the leased employee is your common-law employee, that employee will be your employee for all purposes, regardless of any pension plan of the leasing organization. H&r block amended return 2013 Net earnings from self-employment. H&r block amended return 2013   For SEP and qualified plans, net earnings from self-employment is your gross income from your trade or business (provided your personal services are a material income-producing factor) minus allowable business deductions. H&r block amended return 2013 Allowable deductions include contributions to SEP and qualified plans for common-law employees and the deduction allowed for the deductible part of your self-employment tax. H&r block amended return 2013   Net earnings from self-employment does not include items excluded from gross income (or their related deductions) other than foreign earned income and foreign housing cost amounts. H&r block amended return 2013   For the deduction limits, earned income is net earnings for personal services actually rendered to the business. H&r block amended return 2013 You take into account the income tax deduction for the deductible part of self-employment tax and the deduction for contributions to the plan made on your behalf when figuring net earnings. H&r block amended return 2013   Net earnings include a partner's distributive share of partnership income or loss (other than separately stated items, such as capital gains and losses). H&r block amended return 2013 It does not include income passed through to shareholders of S corporations. H&r block amended return 2013 Guaranteed payments to limited partners are net earnings from self-employment if they are paid for services to or for the partnership. H&r block amended return 2013 Distributions of other income or loss to limited partners are not net earnings from self-employment. H&r block amended return 2013   For SIMPLE plans, net earnings from self-employment is the amount on line 4 of Short Schedule SE or line 6 of Long Schedule SE (Form 1040), Self-Employment Tax, before subtracting any contributions made to the SIMPLE plan for yourself. H&r block amended return 2013 Qualified plan. H&r block amended return 2013   A qualified plan is a retirement plan that offers a tax-favored way to save for retirement. H&r block amended return 2013 You can deduct contributions made to the plan for your employees. H&r block amended return 2013 Earnings on these contributions are generally tax free until distributed at retirement. H&r block amended return 2013 Profit-sharing, money purchase, and defined benefit plans are qualified plans. H&r block amended return 2013 A 401(k) plan is also a qualified plan. H&r block amended return 2013 Participant. H&r block amended return 2013   A participant is an eligible employee who is covered by your retirement plan. H&r block amended return 2013 See the discussions of the different types of plans for the definition of an employee eligible to participate in each type of plan. H&r block amended return 2013 Partner. H&r block amended return 2013   A partner is an individual who shares ownership of an unincorporated trade or business with one or more persons. H&r block amended return 2013 For retirement plans, a partner is treated as an employee of the partnership. H&r block amended return 2013 Self-employed individual. H&r block amended return 2013   An individual in business for himself or herself, and whose business is not incorporated, is self-employed. H&r block amended return 2013 Sole proprietors and partners are self-employed. H&r block amended return 2013 Self-employment can include part-time work. H&r block amended return 2013   Not everyone who has net earnings from self-employment for social security tax purposes is self-employed for qualified plan purposes. H&r block amended return 2013 See Common-law employee and Net earnings from self-employment , earlier. H&r block amended return 2013   In addition, certain fishermen may be considered self-employed for setting up a qualified plan. H&r block amended return 2013 See Publication 595, Capital Construction Fund for Commercial Fishermen, for the special rules used to determine whether fishermen are self-employed. H&r block amended return 2013 Sole proprietor. H&r block amended return 2013   A sole proprietor is an individual who owns an unincorporated business by himself or herself, including a single member limited liability company that is treated as a disregarded entity for tax purposes. H&r block amended return 2013 For retirement plans, a sole proprietor is treated as both an employer and an employee. H&r block amended return 2013 Prev  Up  Next   Home   More Online Publications
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The H&r Block Amended Return 2013

H&r block amended return 2013 15. H&r block amended return 2013   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. H&r block amended return 2013 More information. H&r block amended return 2013 Special SituationsException for sales to related persons. H&r block amended return 2013 Recapturing (Paying Back) a Federal Mortgage Subsidy Reminder Home sold with undeducted points. H&r block amended return 2013  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. H&r block amended return 2013 See Mortgage ending early under Points in chapter 23. H&r block amended return 2013 Introduction This chapter explains the tax rules that apply when you sell your main home. H&r block amended return 2013 In most cases, your main home is the one in which you live most of the time. H&r block amended return 2013 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). H&r block amended return 2013 See Excluding the Gain , later. H&r block amended return 2013 Generally, if you can exclude all the gain, you do not need to report the sale on your tax return. H&r block amended return 2013 If you have gain that cannot be excluded, it is taxable. H&r block amended return 2013 Report it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040). H&r block amended return 2013 You may also have to complete Form 4797, Sales of Business Property. H&r block amended return 2013 See Reporting the Sale , later. H&r block amended return 2013 If you have a loss on the sale, you generally cannot deduct it on your return. H&r block amended return 2013 However, you may need to report it. H&r block amended return 2013 See Reporting the Sale , later. H&r block amended return 2013 The following are main topics in this chapter. H&r block amended return 2013 Figuring gain or loss. H&r block amended return 2013 Basis. H&r block amended return 2013 Excluding the gain. H&r block amended return 2013 Ownership and use tests. H&r block amended return 2013 Reporting the sale. H&r block amended return 2013 Other topics include the following. H&r block amended return 2013 Business use or rental of home. H&r block amended return 2013 Recapturing a federal mortgage subsidy. H&r block amended return 2013 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. H&r block amended return 2013 ” 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. H&r block amended return 2013 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. H&r block amended return 2013 Land. H&r block amended return 2013   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. H&r block amended return 2013 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. H&r block amended return 2013 See Vacant land under Main Home in Publication 523 for more information. H&r block amended return 2013 Example. H&r block amended return 2013 You buy a piece of land and move your main home to it. H&r block amended return 2013 Then you sell the land on which your main home was located. H&r block amended return 2013 This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. H&r block amended return 2013 More than one home. H&r block amended return 2013   If you have more than one home, you can exclude gain only from the sale of your main home. H&r block amended return 2013 You must include in income gain from the sale of any other home. H&r block amended return 2013 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. H&r block amended return 2013 Example 1. H&r block amended return 2013 You own two homes, one in New York and one in Florida. H&r block amended return 2013 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. H&r block amended return 2013 In the absence of facts and circumstances indicating otherwise, the New York home is your main home. H&r block amended return 2013 You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. H&r block amended return 2013 Example 2. H&r block amended return 2013 You own a house, but you live in another house that you rent. H&r block amended return 2013 The rented house is your main home. H&r block amended return 2013 Example 3. H&r block amended return 2013 You own two homes, one in Virginia and one in New Hampshire. H&r block amended return 2013 In 2009 and 2010, you lived in the Virginia home. H&r block amended return 2013 In 2011 and 2012, you lived in the New Hampshire home. H&r block amended return 2013 In 2013, you lived again in the Virginia home. H&r block amended return 2013 Your main home in 2009, 2010, and 2013 is the Virginia home. H&r block amended return 2013 Your main home in 2011 and 2012 is the New Hampshire home. H&r block amended return 2013 You would be eligible to exclude gain from the sale of either home (but not both) in 2013. H&r block amended return 2013 Property used partly as your main home. H&r block amended return 2013   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. H&r block amended return 2013 For details, see Business Use or Rental of Home , later. H&r block amended return 2013 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. H&r block amended return 2013 Subtract the adjusted basis from the amount realized to get your gain or loss. H&r block amended return 2013     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. H&r block amended return 2013 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. H&r block amended return 2013 Payment by employer. H&r block amended return 2013   You may have to sell your home because of a job transfer. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 Option to buy. H&r block amended return 2013   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. H&r block amended return 2013 If the option is not exercised, you must report the amount as ordinary income in the year the option expires. H&r block amended return 2013 Report this amount on Form 1040, line 21. H&r block amended return 2013 Form 1099-S. H&r block amended return 2013   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. H&r block amended return 2013   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. H&r block amended return 2013 Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. H&r block amended return 2013 Amount Realized The amount realized is the selling price minus selling expenses. H&r block amended return 2013 Selling expenses. H&r block amended return 2013   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. H&r block amended return 2013 ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. H&r block amended return 2013 This adjusted basis must be determined before you can figure gain or loss on the sale of your home. H&r block amended return 2013 For information on how to figure your home's adjusted basis, see Determining Basis , later. H&r block amended return 2013 Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. H&r block amended return 2013 Gain on sale. H&r block amended return 2013   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. H&r block amended return 2013 Loss on sale. H&r block amended return 2013   If the amount realized is less than the adjusted basis, the difference is a loss. H&r block amended return 2013 A loss on the sale of your main home cannot be deducted. H&r block amended return 2013 Jointly owned home. H&r block amended return 2013   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. H&r block amended return 2013 Separate returns. H&r block amended return 2013   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. H&r block amended return 2013 Your ownership interest is generally determined by state law. H&r block amended return 2013 Joint owners not married. H&r block amended return 2013   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. H&r block amended return 2013 Each of you applies the rules discussed in this chapter on an individual basis. H&r block amended return 2013 Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. H&r block amended return 2013 Foreclosure or repossession. H&r block amended return 2013   If your home was foreclosed on or repossessed, you have a disposition. H&r block amended return 2013 See Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments, to determine if you have ordinary income, gain, or loss. H&r block amended return 2013 Abandonment. H&r block amended return 2013   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. H&r block amended return 2013 Trading (exchanging) homes. H&r block amended return 2013   If you trade your old home for another home, treat the trade as a sale and a purchase. H&r block amended return 2013 Example. H&r block amended return 2013 You owned and lived in a home with an adjusted basis of $41,000. H&r block amended return 2013 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. H&r block amended return 2013 This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 – $41,000). H&r block amended return 2013 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). H&r block amended return 2013 Transfer to spouse. H&r block amended return 2013   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. H&r block amended return 2013 This is true even if you receive cash or other consideration for the home. H&r block amended return 2013 As a result, the rules in this chapter do not apply. H&r block amended return 2013 More information. H&r block amended return 2013   If you need more information, see Transfer to spouse in Publication 523 and Property Settlements in Publication 504, Divorced or Separated Individuals. H&r block amended return 2013 Involuntary conversion. H&r block amended return 2013   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. H&r block amended return 2013 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 . H&r block amended return 2013 Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. H&r block amended return 2013 Your basis in your home is determined by how you got the home. H&r block amended return 2013 Generally, your basis is its cost if you bought it or built it. H&r block amended return 2013 If you got it in some other way (inheritance, gift, etc. H&r block amended return 2013 ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. H&r block amended return 2013 While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. H&r block amended return 2013 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. H&r block amended return 2013 See Adjusted Basis , later. H&r block amended return 2013 You can find more information on basis and adjusted basis in chapter 13 of this publication and in Publication 523. H&r block amended return 2013 Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. H&r block amended return 2013 Purchase. H&r block amended return 2013   If you bought your home, your basis is its cost to you. H&r block amended return 2013 This includes the purchase price and certain settlement or closing costs. H&r block amended return 2013 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. H&r block amended return 2013 If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed in Publication 523. H&r block amended return 2013 Settlement fees or closing costs. H&r block amended return 2013   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. H&r block amended return 2013 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. H&r block amended return 2013 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). H&r block amended return 2013    Chapter 13 lists some of the settlement fees and closing costs that you can include in the basis of property, including your home. H&r block amended return 2013 It also lists some settlement costs that cannot be included in basis. H&r block amended return 2013   Also see Publication 523 for additional items and a discussion of basis other than cost. H&r block amended return 2013 Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. H&r block amended return 2013 To figure your adjusted basis, you can use Worksheet 1 in Publication 523. H&r block amended return 2013 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. H&r block amended return 2013 Increases to basis. H&r block amended return 2013   These include the following. H&r block amended return 2013 Additions and other improvements that have a useful life of more than 1 year. H&r block amended return 2013 Special assessments for local improvements. H&r block amended return 2013 Amounts you spent after a casualty to restore damaged property. H&r block amended return 2013 Improvements. H&r block amended return 2013   These add to the value of your home, prolong its useful life, or adapt it to new uses. H&r block amended return 2013 You add the cost of additions and other improvements to the basis of your property. H&r block amended return 2013   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. H&r block amended return 2013 An addition to your house, such as a new deck, a sunroom, or a new garage, is also an improvement. H&r block amended return 2013 Repairs. H&r block amended return 2013   These maintain your home in good condition but do not add to its value or prolong its life. H&r block amended return 2013 You do not add their cost to the basis of your property. H&r block amended return 2013   Examples of repairs include repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes. H&r block amended return 2013 Decreases to basis. H&r block amended return 2013   These include the following. H&r block amended return 2013 Discharge of qualified principal residence indebtedness that was excluded from income. H&r block amended return 2013 Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. H&r block amended return 2013 For details, see Publication 4681. H&r block amended return 2013 Gain you postponed from the sale of a previous home before May 7, 1997. H&r block amended return 2013 Deductible casualty losses. H&r block amended return 2013 Insurance payments you received or expect to receive for casualty losses. H&r block amended return 2013 Payments you received for granting an easement or right-of-way. H&r block amended return 2013 Depreciation allowed or allowable if you used your home for business or rental purposes. H&r block amended return 2013 Energy-related credits allowed for expenditures made on the residence. H&r block amended return 2013 (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. H&r block amended return 2013 ) Adoption credit you claimed for improvements added to the basis of your home. H&r block amended return 2013 Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 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). H&r block amended return 2013 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. H&r block amended return 2013 Discharges of qualified principal residence indebtedness. H&r block amended return 2013   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. H&r block amended return 2013 This exclusion applies to discharges made after 2006 and before 2014. H&r block amended return 2013 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. H&r block amended return 2013   File Form 982 with your tax return. H&r block amended return 2013 See the form's instructions for detailed information. H&r block amended return 2013 Recordkeeping. H&r block amended return 2013 You should keep records to prove your home's adjusted basis. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 Keep records proving the basis of both homes as long as they are needed for tax purposes. H&r block amended return 2013 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. H&r block amended return 2013 Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. H&r block amended return 2013 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. H&r block amended return 2013 To qualify, you must meet the ownership and use tests described later. H&r block amended return 2013 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. H&r block amended return 2013 You can use Worksheet 2 in Publication 523 to figure the amount of your exclusion and your taxable gain, if any. H&r block amended return 2013 If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. H&r block amended return 2013 See Publication 505, Tax Withholding and Estimated Tax. H&r block amended return 2013 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. H&r block amended return 2013 You meet the ownership test. H&r block amended return 2013 You meet the use test. H&r block amended return 2013 During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. H&r block amended return 2013 For details on gain allocated to periods of nonqualified use, see Periods of nonqualified use , later. H&r block amended return 2013 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 . H&r block amended return 2013 Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. H&r block amended return 2013 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). H&r block amended return 2013 Exception. H&r block amended return 2013   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. H&r block amended return 2013 However, the maximum amount you may be able to exclude will be reduced. H&r block amended return 2013 See Reduced Maximum Exclusion , later. H&r block amended return 2013 Example 1—home owned and occupied for at least 2 years. H&r block amended return 2013 Mya bought and moved into her main home in September 2011. H&r block amended return 2013 She sold the home at a gain in October 2013. H&r block amended return 2013 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. H&r block amended return 2013 She meets the ownership and use tests. H&r block amended return 2013 Example 2—ownership test met but use test not met. H&r block amended return 2013 Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. H&r block amended return 2013 He later sold the home for a gain. H&r block amended return 2013 He owned the home during the entire 5-year period ending on the date of sale. H&r block amended return 2013 He meets the ownership test but not the use test. H&r block amended return 2013 He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 Temporary absence. H&r block amended return 2013   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. H&r block amended return 2013 The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. H&r block amended return 2013 Example 1. H&r block amended return 2013 David Johnson, who is single, bought and moved into his home on February 1, 2011. H&r block amended return 2013 Each year during 2011 and 2012, David left his home for a 2-month summer vacation. H&r block amended return 2013 David sold the house on March 1, 2013. H&r block amended return 2013 Although the total time David used his home is less than 2 years (21 months), he meets the requirement and may exclude gain. H&r block amended return 2013 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. H&r block amended return 2013 Example 2. H&r block amended return 2013 Professor Paul Beard, who is single, bought and moved into a house on August 18, 2010. H&r block amended return 2013 He lived in it as his main home continuously until January 5, 2012, when he went abroad for a 1-year sabbatical leave. H&r block amended return 2013 On February 6, 2013, 1 month after returning from the leave, Paul sold the house at a gain. H&r block amended return 2013 Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. H&r block amended return 2013 He cannot exclude any part of his gain, because he did not use the residence for the required 2 years. H&r block amended return 2013 Ownership and use tests met at different times. H&r block amended return 2013   You can meet the ownership and use tests during different 2-year periods. H&r block amended return 2013 However, you must meet both tests during the 5-year period ending on the date of the sale. H&r block amended return 2013 Example. H&r block amended return 2013 Beginning in 2002, Helen Jones lived in a rented apartment. H&r block amended return 2013 The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. H&r block amended return 2013 In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. H&r block amended return 2013 On July 12, 2013, while still living in her daughter's home, she sold her condominium. H&r block amended return 2013 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. H&r block amended return 2013 She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). H&r block amended return 2013 She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). H&r block amended return 2013 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. H&r block amended return 2013 Cooperative apartment. H&r block amended return 2013   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. H&r block amended return 2013 Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. H&r block amended return 2013 Exception for individuals with a disability. H&r block amended return 2013   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. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 Previous home destroyed or condemned. H&r block amended return 2013   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. H&r block amended return 2013 This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home. H&r block amended return 2013 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. H&r block amended return 2013 Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. H&r block amended return 2013   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. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013   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. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 (But see Special rules for joint returns , next. H&r block amended return 2013 ) Special rules for joint returns. H&r block amended return 2013   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. H&r block amended return 2013 You are married and file a joint return for the year. H&r block amended return 2013 Either you or your spouse meets the ownership test. H&r block amended return 2013 Both you and your spouse meet the use test. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. H&r block amended return 2013 Example 1—one spouse sells a home. H&r block amended return 2013 Emily sells her home in June 2013 for a gain of $300,000. H&r block amended return 2013 She marries Jamie later in the year. H&r block amended return 2013 She meets the ownership and use tests, but Jamie does not. H&r block amended return 2013 Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. H&r block amended return 2013 The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. H&r block amended return 2013 Example 2—each spouse sells a home. H&r block amended return 2013 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. H&r block amended return 2013 He meets the ownership and use tests on his home, but Emily does not. H&r block amended return 2013 Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. H&r block amended return 2013 However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. H&r block amended return 2013 Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. H&r block amended return 2013 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. H&r block amended return 2013 Sale of main home by surviving spouse. H&r block amended return 2013   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. H&r block amended return 2013   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. H&r block amended return 2013 The sale or exchange took place after 2008. H&r block amended return 2013 The sale or exchange took place no more than 2 years after the date of death of your spouse. H&r block amended return 2013 You have not remarried. H&r block amended return 2013 You and your spouse met the use test at the time of your spouse's death. H&r block amended return 2013 You or your spouse met the ownership test at the time of your spouse's death. H&r block amended return 2013 Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. H&r block amended return 2013 Example. H&r block amended return 2013   Harry owned and used a house as his main home since 2009. H&r block amended return 2013 Harry and Wilma married on July 1, 2013, and from that date they use Harry's house as their main home. H&r block amended return 2013 Harry died on August 15, 2013, and Wilma inherited the property. H&r block amended return 2013 Wilma sold the property on September 3, 2013, at which time she had not remarried. H&r block amended return 2013 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. H&r block amended return 2013 Home transferred from spouse. H&r block amended return 2013   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. H&r block amended return 2013 Use of home after divorce. H&r block amended return 2013   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. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. H&r block amended return 2013 A change in place of employment. H&r block amended return 2013 Health. H&r block amended return 2013 Unforeseen circumstances. H&r block amended return 2013 Unforeseen circumstances. H&r block amended return 2013   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. H&r block amended return 2013   See Publication 523 for more information and to use Worksheet 3 to figure your reduced maximum exclusion. H&r block amended return 2013 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. H&r block amended return 2013 But you must meet the ownership and use tests. H&r block amended return 2013 Periods of nonqualified use. H&r block amended return 2013   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. H&r block amended return 2013 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. H&r block amended return 2013 Exceptions. H&r block amended return 2013   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. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 Gain from the sale or exchange of property allocable to nonqualified use will not qualify for the exclusion. H&r block amended return 2013 Calculation. H&r block amended return 2013   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. H&r block amended return 2013 Example 1. H&r block amended return 2013 On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. H&r block amended return 2013 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. H&r block amended return 2013 The house was rented from June 1, 2009, to March 31, 2011. H&r block amended return 2013 Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 Amy divides 668 by 2,080 and obtains a decimal (rounded to at least three decimal places) of 0. H&r block amended return 2013 321. H&r block amended return 2013 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. H&r block amended return 2013 321. H&r block amended return 2013 Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain. H&r block amended return 2013 Example 2. H&r block amended return 2013 William owned and used a house as his main home from 2007 through 2010. H&r block amended return 2013 On January 1, 2011, he moved to another state. H&r block amended return 2013 He rented his house from that date until April 30, 2013, when he sold it. H&r block amended return 2013 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. H&r block amended return 2013 He must report the sale on Form 4797 because it was rental property at the time of sale. H&r block amended return 2013 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. H&r block amended return 2013 Because he met the ownership and use tests, he can exclude gain up to $250,000. H&r block amended return 2013 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. H&r block amended return 2013 Depreciation after May 6, 1997. H&r block amended return 2013   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. H&r block amended return 2013 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. H&r block amended return 2013 See Publication 544 for more information. H&r block amended return 2013 Property used partly for business or rental. H&r block amended return 2013   If you used property partly as a home and partly for business or to produce rental income, see Publication 523. H&r block amended return 2013 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. H&r block amended return 2013 If any of these conditions apply, report the entire gain or loss. H&r block amended return 2013 For details on how to report the gain or loss, see the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949. H&r block amended return 2013 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). H&r block amended return 2013 See Business Use or Rental of Home in Publication 523 and the Instructions for Form 4797. H&r block amended return 2013 Installment sale. H&r block amended return 2013    Some sales are made under arrangements that provide for part or all of the selling price to be paid in a later year. H&r block amended return 2013 These sales are called “installment sales. H&r block amended return 2013 ” 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. H&r block amended return 2013 You may be able to report the part of the gain you cannot exclude on the installment basis. H&r block amended return 2013    Use Form 6252, Installment Sale Income, to report the sale. H&r block amended return 2013 Enter your exclusion on line 15 of Form 6252. H&r block amended return 2013 Seller-financed mortgage. H&r block amended return 2013   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. H&r block amended return 2013 You must separately report as interest income the interest you receive as part of each payment. H&r block amended return 2013 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). H&r block amended return 2013 The buyer must give you his or her SSN, and you must give the buyer your SSN. H&r block amended return 2013 Failure to meet these requirements may result in a $50 penalty for each failure. H&r block amended return 2013 If either you or the buyer does not have and is not eligible to get an SSN, see Social Security Number in chapter 1. H&r block amended return 2013 More information. H&r block amended return 2013   For more information on installment sales, see Publication 537, Installment Sales. H&r block amended return 2013 Special Situations The situations that follow may affect your exclusion. H&r block amended return 2013 Sale of home acquired in a like-kind exchange. H&r block amended return 2013   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. H&r block amended return 2013 Gain from a like-kind exchange is not taxable at the time of the exchange. H&r block amended return 2013 This means that gain will not be taxed until you sell or otherwise dispose of the property you receive. H&r block amended return 2013 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. H&r block amended return 2013 For more information about like-kind exchanges, see Publication 544, Sales and Other Dispositions of Assets. H&r block amended return 2013 Home relinquished in a like-kind exchange. H&r block amended return 2013   If you use your main home partly for business or rental purposes and then exchange the home for another property, see Publication 523. H&r block amended return 2013 Expatriates. H&r block amended return 2013   You cannot claim the exclusion if the expatriation tax applies to you. H&r block amended return 2013 The expatriation tax applies to certain U. H&r block amended return 2013 S. H&r block amended return 2013 citizens who have renounced their citizenship (and to certain long-term residents who have ended their residency). H&r block amended return 2013 For more information about the expatriation tax, see Expatriation Tax in chapter 4 of Publication 519, U. H&r block amended return 2013 S. H&r block amended return 2013 Tax Guide for Aliens. H&r block amended return 2013 Home destroyed or condemned. H&r block amended return 2013   If your home was destroyed or condemned, any gain (for example, because of insurance proceeds you received) qualifies for the exclusion. H&r block amended return 2013   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. H&r block amended return 2013 Sale of remainder interest. H&r block amended return 2013   Subject to the other rules in this chapter, you can choose to exclude gain from the sale of a remainder interest in your home. H&r block amended return 2013 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. H&r block amended return 2013 Exception for sales to related persons. H&r block amended return 2013   You cannot exclude gain from the sale of a remainder interest in your home to a related person. H&r block amended return 2013 Related persons include your brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. H&r block amended return 2013 ), and lineal descendants (children, grandchildren, etc. H&r block amended return 2013 ). H&r block amended return 2013 Related persons also include certain corporations, partnerships, trusts, and exempt organizations. H&r block amended return 2013 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. H&r block amended return 2013 You recapture the benefit by increasing your federal income tax for the year of the sale. H&r block amended return 2013 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. H&r block amended return 2013 Loans subject to recapture rules. H&r block amended return 2013   The recapture applies to loans that: Came from the proceeds of qualified mortgage bonds, or Were based on mortgage credit certificates. H&r block amended return 2013 The recapture also applies to assumptions of these loans. H&r block amended return 2013 When recapture applies. H&r block amended return 2013   Recapture of the federal mortgage subsidy applies only if you meet both of the following conditions. H&r block amended return 2013 You sell or otherwise dispose of your home at a gain within the first 9 years after the date you close your mortgage loan. H&r block amended return 2013 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). H&r block amended return 2013 When recapture does not apply. H&r block amended return 2013   Recapture does not apply in any of the following situations. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 For more information, see Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma. H&r block amended return 2013 Also see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. H&r block amended return 2013 The home is disposed of as a result of your death. H&r block amended return 2013 You dispose of the home more than 9 years after the date you closed your mortgage loan. H&r block amended return 2013 You transfer the home to your spouse, or to your former spouse incident to a divorce, where no gain is included in your income. H&r block amended return 2013 You dispose of the home at a loss. H&r block amended return 2013 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. H&r block amended return 2013 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. H&r block amended return 2013 For more information, see Replacement Period in Publication 547. H&r block amended return 2013 You refinance your mortgage loan (unless you later meet the conditions listed previously under When recapture applies ). H&r block amended return 2013 Notice of amounts. H&r block amended return 2013   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. H&r block amended return 2013 How to figure and report the recapture. H&r block amended return 2013    The recapture tax is figured on Form 8828. H&r block amended return 2013 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. H&r block amended return 2013 Attach Form 8828 to your Form 1040. H&r block amended return 2013 For more information, see Form 8828 and its instructions. H&r block amended return 2013 Prev  Up  Next   Home   More Online Publications