J. William Seabrooke CPA P.C.

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice.

If you are a homeowner, you will probably sell your home at some point in your lifetime.  This will happen in several circumstances – buying a larger home as your family grows, employer required move, voluntary move, retirement, downsizing, death, divorce, or separation, etc.    This is a reportable transaction insofar as the Internal Revenue Service is concerned.  You should also be prepared to provide written documentation for both your tax return and if your return is questioned by the IRS.    One of the most important documents which you will need is the Housing and Urban Development disclosure form which is often referred to simply as a “HUD-1”.  You will have received this document each time that you go through the closing process – when you originally purchased your home and when you sold it to someone else.   

A related article on this subject (“Are You Planning To Sell A Home?”) was published on this website on August 8th, 2011 (http://www.billseabrookecpa.com/blog/?p=1199).

The entity that was responsible for the closing for the sale of your previously owned residence (usually a title company, but in some states an attorney performs these tasks) will be providing the IRS with a Form 1099-S (“Proceeds From Real Estate Transactions”) which is an “information return” to provide the IRS with the dollar amount of the sale.  You will also receive a copy of this form.      Be sure that you complete all of the required blocks in the Schedule D (“Capital Gains & Losses”) worksheet of  your tax return for the year of the sale.  If you have met all of the requirements, some or all of the gain will be excluded from your capital gains, as provided by Section 121 of the Internal Revenue Code.  This information will appear in Section II (“Long Term Capital Gains and Losses – Assets Held More Than One year”) of Schedule D.  Losses on the sale of a personal residence are not deductible.    (more…)