Income from the sale of your home (2024)

Sale of your principal residence

We conform to the IRS rules and allow you to exclude, up to a certain amount, the gain you make on the sale of your home. You may take an exclusion if you owned and used the home for at least 2 out of 5 years.

In addition, you may only have one home at a time. It may be any of the following:

  • House
  • Houseboat
  • Mobile home
  • Trailer
  • Cooperative apartment
  • Condominium

Ownership and use requirement

During the 5 years before you sell your home, you must have at least:

  • 2 years of ownership and
  • 2 years of use as a primary residence

Ownership and use can occur at different times.


You do not have to report the sale of your home if all of the following apply:

  • Your gain from the sale was less than $250,000
  • You have not used the exclusion in the last 2 years
  • You owned and occupied the home for at least 2 years

Any gain over $250,000 is taxable.

Married/Registered domestic partner (RDP)

Married/RDP couples can exclude up to $500,000 if all of the following apply:

  • Your gain from the sale was less than $500,000
  • You filed a joint return for the year of sale or exchange
  • Either spouse/RDP meets the 2-out-of-5-year ownership requirement
  • Both spouses/RDPs meet the 2-out-of-5-year use requirement
  • Neither you nor your spouse/RDP excluded gain from the sale of another home in the last 2 years

Any gain over $500,000 is taxable.

Work out your gain

If you do not qualify for the exclusion or choose not to take the exclusion, you may owe tax on the gain.

Your gain is usually the difference between what you paid for your home and the sale amount. Use Selling Your Home (IRS Publication 523) to:

  • Determine if you have a gain or loss on the sale of your home
  • Figure how much of any gain is taxable
  • Report the transaction correctly on your tax return

How to report

If your gain exceeds your exclusion amount, you have taxable income. File the following forms with your return:

Visit Instructions for California Schedule D (540) for more information.

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Income from the sale of your home (2024)


Is money from the sale of a house considered income? ›

Reported sale

Taxpayers who don't qualify to exclude all of the taxable gain from their income must report the gain from the sale of their home when they file their tax return. Anyone who chooses not to claim the exclusion must report the taxable gain on their tax return.

Do I have to report the sale of my home to the IRS? ›

Report the sale or exchange of your main home on Form 8949, Sale and Other Dispositions of Capital Assets, if: 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 a Form 1099-S.

Do you always get a 1099-S when you sell your house? ›

Depending on who handles the closing of a property sale in your state you may or may not receive a Form 1099-S. Speak to your closing attorney or realtor to see if a 1099-S is being sent. But do not request one if not needed.

Do I have to reinvest profit from house sale? ›

The short answer is that profit (after paying a mortgage and sale-related costs) is yours to keep when you sell real estate. You're not required to use the proceeds to buy another property.

Do I pay taxes on selling my parents' home? ›

If you sell inherited property, is it taxable? If you sell an inherited property in California, it's generally not taxable. The only taxation involved is on the capital gains, which refers to any increase in the property's value over its value at the time of your relative's death — once specific costs are subtracted.

Is there a way to avoid capital gains tax on the selling of a house? ›

You will avoid capital gains tax if your profit on the sale is less than $250,000 (for single filers) or $500,000 (if you're married and filing jointly), provided it has been your primary residence for at least two of the past five years.

How does selling my house affect my taxes? ›

Whenever you sell a house, it can be subject to capital gains taxes. But fortunately, the IRS provides certain exclusions that some home-sellers qualify for. If you meet certain requirements, you can exclude $250,000 from the sale of your home. That number increases to $500,000 if you're married and filing jointly.

Why did I get a 1099-S when I sold my house? ›

When you sell your home, federal tax law requires lenders or real estate agents to file a Form 1099-S, Proceeds from Real Estate Transactions, with the IRS and send you a copy if you do not meet IRS requirements for excluding the taxable gain from the sale on your income tax return.

Who is responsible for filing a 1099 after closing? ›

Form 1099-S is used to report the sale or exchange of present or future interests in real estate. It is generally filed by the person responsible for closing the transaction, but depending on the circ*mstances it might also be filed by the mortgage lender or a broker for one side or other in the transaction.

Who sends you a 1099-S when you sell your house? ›

According to the IRS, the person who must file the Form 1099-S reporting the sale is the person responsible for closing the transaction. This means that if you used a title company or attorney to close your transaction they are generally responsible for completing and filing the form on your behalf.

Who is exempt from 1099s? ›

Generally, a 1099 is not required to be issued for international vendors who are foreign vendors. Individuals living outside the United States who qualify to file an IRS Form W-8BEN as foreign persons/foreign contractors and don't perform services in the United States, don't get a Form 1099-NEC.

What happens if you don't report a 1099-S? ›

If you fail to file any type of 1099 form, the IRS can technically start issuing penalties starting at $250 per failure to those who don't follow through with this requirement (that is, if they ever find out about it).

At what age do you not pay capital gains? ›

Capital Gains Tax for People Over 65. For individuals over 65, capital gains tax applies at 0% for long-term gains on assets held over a year and 15% for short-term gains under a year. Despite age, the IRS determines tax based on asset sale profits, with no special breaks for those 65 and older.

How long do I have to buy another house to avoid capital gains? ›

You might be able to defer capital gains by buying another home. As long as you sell your first investment property and apply your profits to the purchase of a new investment property within 180 days, you can defer taxes.

How does the IRS know if you sold your home? ›

Typically, when a taxpayer sells a house (or any other piece of real property), the title company handling the closing generates a Form 1099 setting forth the sales price received for the house. The 1099 is transmitted to the IRS.

Is the sale of an asset considered income? ›

Generally speaking, sales of assets such as equipment, buildings, vehicles and furniture will be taxed at ordinary income tax rates, while intangible assets such as goodwill or intellectual property will be taxed at capital gains rates.

Are capital gains considered income? ›

Capital Gains and Dividends. How are capital gains taxed? Capital gains are profits from the sale of a capital asset, such as shares of stock, a business, a parcel of land, or a work of art. Capital gains are generally included in taxable income, but in most cases, are taxed at a lower rate.

Is sale of real estate considered passive income? ›

Regs. Sec. 1.469-2T(f)(5)) and generates net rental income for the year, such net income (including any gains from the sale or disposition of the property) is recharacterized as nonpassive income for that year. This is to prevent taxpayers from inflating rent to free up passive losses from other activities.


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