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The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their home.  If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income.  Here are ten tips from the IRS to keep in mind when selling your home.

1.  In general, you are eligible to exclude the gain
from income if you have owned and used your home as your main home for two
years out of the five years prior to the date of its sale.
2.  You are not eligible for the exclusion if you
excluded the gain from the sale of another home during the two-year period
prior to the sale of your home.

3.  If you can exclude all of the gain, you do not
need to report the sale on your tax return.

4.  If you have a gain that cannot be excluded, it is taxable.  You must report it on Form
1040, Schedule D, Capital Gains and Losses.

5.  You cannot deduct a loss from the sale of your main home.

6.  Worksheets are included in Publication 523,
Selling Your Home, to help you figure the adjusted basis of the home you sold,
the gain (or loss) on the sale, and the gain that you can exclude.

7.  If you have more than one home, you can exclude
a gain only from the sale of your main home.
You must pay tax on the gain from selling any other home.  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.

8.  If you received the first-time homebuyer credit
and within 36 months of the date of purchase, the property is no longer used as
your principal residence, you are required to repay the credit.  Repayment of the full credit is due with the
income tax return for the year the home ceased to be your principal residence,
using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit.  The full amount of the credit is reflected as
additional tax on that year’s tax return.

9.  When you move, be sure to update your address with the IRS and the U.S. Postal
Service to ensure you receive refunds or correspondence from the IRS.  Use Form 8822, Change of Address, to notify
the IRS of your address change.

** For more information about selling your home, see IRS Publication 523, Selling Your Home.  This
publication is available at or by calling 800-TAX-FORM (800-829-3676).

 This information was reprinted from the September 2011 edition of the Houston Realtor Magazine (HAR) to help consumers with home selling tax information.  Realtors cannot tax or legal advice.  This is information to help consumers.



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