Sold home that family member lived in
Terry, I love seeing you on WGN morning news. You always have great info. I can’t find exactly what I need to know for my situation. I bought a house in 1990 for $45,000. In 2020, I bought the house next door and moved into it. My son moved into the old house. I sold the old house in January of this year for $35,000 (needed a lot of work) to an investor. The old house wasn’t actually a rental as my son only paid the utilities. I made no money on it as a “rental” property. What are my tax implications?
Terry Says
You have no tax implications if you can show that your cost basis (actual purchase price plus improvements) was more — or even — with the price you received for it. If there was a mortgage involved, you might find that you receive a 1099 from the lender. In that case you might need to file a Schedule D — detailing cost basis vs sales price. Check with your accountant as to whether this sale requires that.
The statement below comes from the IRS: https://www.irs.gov/taxtopics/tc701#:~:text=Use%20Schedule%20D%20(Form%201040,to%20report%20the%20home%20sale.
Reporting the Sale
If you receive an informational income-reporting document such as Form 1099-S, Proceeds From Real Estate Transactions, you must report the sale of the home even if the gain from the sale is excludable. Additionally, you must report the sale of the home if you can’t exclude all of your capital gain from income. Use Schedule D (Form 1040), Capital Gains and Losses and Form 8949, Sales and Other Dispositions of Capital Assets when required to report the home sale. Refer to Publication 523 for the rules on reporting your sale on your income tax return.
