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Filing Amended Tax Return

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Filing Amended Tax Return

Filing amended tax return Index A Acontecimientos futuros, Acontecimientos futuros Administración del Seguro Social (SSA) Ayuda para radicar documentos ante la SSA , Ayuda para radicar documentos ante la SSA. Filing amended tax return Ajustes a los Formularios 941-PR, 944(SP) o 943-PR Ajustes del período en curso, Ajustes del período en curso. Filing amended tax return Ajustes de períodos anteriores a los Formularios 941-PR, 944(SP) o 943-PR, Ajustes de períodos anteriores Cambio en el proceso para hacer ajustes libres de intereses, Antecedentes. Filing amended tax return Excepciones a las correcciones de las contribuciones sobre la nómina libres de intereses , Excepciones a las correcciones de las contribuciones sobre la nómina libres de intereses. Filing amended tax return Planillas para ajustes en períodos anteriores, Planillas para ajustes en períodos anteriores. Filing amended tax return Proceso para hacer ajustes a las contribuciones sobre la nómina, Proceso para hacer ajustes a las contribuciones sobre la nómina. Filing amended tax return Recaudando las contribuciones retenidas de menos de los empleados, Recaudando las contribuciones retenidas de menos de los empleados. Filing amended tax return Reintegro de cantidades incorrectamente retenidas de los empleados, Reintegro de cantidades incorrectamente retenidas de los empleados. Filing amended tax return Ayuda contributiva, Cómo obtener ayuda relacionada con las contribuciones Ayuda provista por el IRS , Ayuda provista por el IRS. Filing amended tax return Ayuda relacionada con las contribuciones, Ayuda relacionada con las contribuciones. Filing amended tax return B Beneficios marginales, Retención y declaración de la contribución sobre beneficios marginales proporcionados a los empleados Cuándo se tratan los beneficios marginales como pagados al empleado, Cuándo se tratan los beneficios marginales como pagados al empleado. Filing amended tax return Depósito de la contribución sobre los beneficios marginales, Depósito de la contribución sobre los beneficios marginales. Filing amended tax return Regla especial en el caso de beneficios marginales proporcionados en noviembre y diciembre, Regla especial en el caso de beneficios marginales proporcionados en noviembre y diciembre. Filing amended tax return Retención de las contribuciones al Seguro Social y al seguro Medicare sobre los beneficios marginales, Retención de las contribuciones al Seguro Social y al seguro Medicare sobre los beneficios marginales. Filing amended tax return Valorización de vehículos proporcionados a los empleados, Valorización de vehículos proporcionados a los empleados. Filing amended tax return C Cálculo de las contribuciones al Seguro Social, al seguro Medicare y al FUTA , 9. Filing amended tax return Cálculo de las contribuciones al Seguro Social, al seguro Medicare y al FUTA Compensación por enfermedad, Pagos de compensación por enfermedad. Filing amended tax return Contribución Adicional al Medicare , Retención de la Contribución Adicional al Medicare. Filing amended tax return Contribuciones al Seguro Social y al Medicare , Contribuciones al Seguro Social y al Medicare. Filing amended tax return Contribuciones pagadas por el patrono, Contribución pagada por el patrono correspondiente al empleado. Filing amended tax return Deducción de la contribución, Deducción de la contribución. Filing amended tax return Patronos domésticos y agrícolas, Patronos domésticos y agrícolas. Filing amended tax return Calendario, Calendario Formulario 499R-2/W-2PR, Calendario Formulario 940-PR, Calendario Formulario 943-PR, Calendario Formulario 944(SP), Calendario Formulario 944-PR, Calendario Para el 28 de febrero, Calendario Para el 30 de abril, Calendario Para el 31 de enero, Calendario Para el 31 de julio, Calendario Para el 31 de marzo, Calendario Para el 31 de octubre, Calendario Clasificación errónea de empleados, Clasificación errónea de empleados. Filing amended tax return COBRA Crédito de asistencia para las primas COBRA , Recordatorios, Crédito de asistencia para las primas de COBRA. Filing amended tax return Comentarios y sugerencias, Recordatorios Compañías subsidarias calificadas conforme al subcapítulo S QSubs, Entidades no consideradas como separadas de sus dueños y compañías subsidarias calificadas conforme al subcapítulo S (QSubs). Filing amended tax return Compensación por enfermedad, Compensación por enfermedad Patronos Compensación por enfermedad procedentes de una compañía de seguros o de algún otro tercero pagador, Patronos. Filing amended tax return Terceros pagadores, Terceros pagadores. Filing amended tax return Contratación de nuevos empleados, Recordatorios Contratistas independientes, Contratistas independientes. Filing amended tax return Contribución Adicional al Medicare Retención de la Contribución Adicional al Medicare , Recordatorios Contribución Adicional al Medicare, ajustes a la retención, Ajustes a la retención de la Contribución Adicional al Medicare. Filing amended tax return Contribución al Seguro Social y al seguro Medicare por trabajo agrícola, 7. Filing amended tax return Contribución al Seguro Social y al seguro Medicare por trabajo agrícola El requisito de los $150 o $2,500, El requisito de los $150 o $2,500. Filing amended tax return Excepciones al requisito de los $150 o $2,500, Excepciones. Filing amended tax return Contribución al Seguro Social y al seguro Medicare por trabajo doméstico, 8. Filing amended tax return Contribución al Seguro Social y al seguro Medicare por trabajo doméstico Contribución FUTA , Contribución federal para el desempleo (contribución FUTA). Filing amended tax return Contribución sobre los ingresos de Puerto Rico, Contribuciones sobre los ingresos de Puerto Rico. Filing amended tax return Contribuciones al Seguro Social y al Medicare para 2014, Contribuciones al Seguro Social y al Medicare para 2014. Filing amended tax return Crédito contributivo por oportunidad de trabajo, Recordatorios D Defensor del Contribuyente, Servicio del Defensor del Contribuyente. Filing amended tax return Depósito de las contribuciones al Seguro Social y al seguro  Medicare, requisitos de Ajustes a las contribuciones del período retroactivo , Ajustes a las contribuciones del período retroactivo. Filing amended tax return Aplicación de los itinerarios mensuales y bisemanales, Aplicación de los itinerarios mensuales y bisemanales. Filing amended tax return Cuándo se tienen que hacer los depósitos, Cuándo se tienen que hacer los depósitos. Filing amended tax return Depósitos en días laborables solamente, Depósitos en días laborables solamente. Filing amended tax return Depósitos, cuándo se hacen, 11. Filing amended tax return Depósito de las contribuciones al Seguro Social y al seguro  Medicare Días feriados oficiales, Días feriados oficiales. Filing amended tax return Ejemplo de itinerario bisemanal, Ejemplo de itinerario bisemanal. Filing amended tax return Ejemplo de itinerario mensual, Ejemplo de itinerario mensual. Filing amended tax return Ejemplo de las reglas de depósito de itinerario mensual y bisemanal para patronos de empleados agrícolas, Ejemplo de las reglas de depósito de itinerario mensual y bisemanal para patronos de empleados agrícolas. Filing amended tax return Ejemplo de las reglas de depósito de itinerario mensual y bisemanal para patronos de empleados no agrícolas, Ejemplo de las reglas de depósito de itinerario mensual y bisemanal para patronos de empleados no agrícolas. Filing amended tax return Fecha compensatoria para una cantidad depositada de menos, Fecha compensatoria para una cantidad depositada de menos: Formularios 941-X (PR), 944-X (PR), 944-X (SP), 943-X (PR), Ajustes a las contribuciones del período retroactivo. Filing amended tax return Patronos de empleados agrícolas nuevos, Patronos de empleados agrícolas nuevos. Filing amended tax return Patronos nuevos, Patronos nuevos. Filing amended tax return Patronos que tienen empleados tanto agrícolas como no agrícolas, Patronos que tienen empleados tanto agrícolas como no agrícolas. Filing amended tax return Período de depósito, Período de depósito. Filing amended tax return Período de depósito de itinerario bisemanal que abarca 2 trimestres, Período de depósito de itinerario bisemanal que abarca 2 trimestres. Filing amended tax return Período retroactivo para patronos de empleados agrícolas, Período retroactivo para patronos de empleados agrícolas. Filing amended tax return Período retroactivo para patronos de empleados no agrícolas, Período retroactivo para patronos de empleados no agrícolas. Filing amended tax return Regla de depositar $100,000 el próximo día, Regla de depositar $100,000 el próximo día. Filing amended tax return Regla de depósito de itinerario mensual, Regla de depósito de itinerario mensual. Filing amended tax return Regla de la exactitud de los depósitos, Regla de la exactitud de los depósitos. Filing amended tax return Reglas para los depositantes de itinerario bisemanal, Reglas para los depositantes de itinerario bisemanal. Filing amended tax return Requisito de los $2,500, Requisito de los $2,500. Filing amended tax return Depósito electrónico Contribución federal, Recordatorios Depósitos de la contribución al Seguro Social y al seguro  Medicare, cómo se hacen, Cómo hacer los depósitos Cuando usted recibe su EIN , Cuando usted recibe su EIN. Filing amended tax return Depósitos hechos a tiempo, Depósitos hechos a tiempo. Filing amended tax return Opción de pago el mismo día, Opción de pago el mismo día. Filing amended tax return Reclamación de créditos por pagos en exceso, Reclamación de créditos por pagos en exceso. Filing amended tax return Registro de depósitos, Registro de depósitos. Filing amended tax return Requisito de depósito electrónico, Requisito de depósito electrónico. Filing amended tax return Dirección Cambio de dirección, Recordatorios Discrepancias entre los Formularios 941-PR or 944-PR y los Formularios 499R-2/W-2PR, Recordatorios E Elegibilidad para empleo, Elegibilidad para empleo. Filing amended tax return Empleado Definición, 2. Filing amended tax return ¿Quiénes son empleados? Estatutarios, Empleados estatutarios. Filing amended tax return Según el derecho común, Definición de empleado según el derecho común. Filing amended tax return Empleado doméstico Requisito de $1,900, Requisito de $1,900. Filing amended tax return Empleados Clasificación errónea de empleados, Clasificación errónea de empleados. Filing amended tax return Empleados arrendados, Empleados arrendados. Filing amended tax return Entidades no consideradas como separadas de sus dueños, Entidades no consideradas como separadas de sus dueños y compañías subsidarias calificadas conforme al subcapítulo S (QSubs). Filing amended tax return Exención, disposiciones de, Disposiciones de exención. Filing amended tax return Especialista en servicios técnicos, Especialista en servicios técnicos. Filing amended tax return F Formulario 499R-2/W-2PR, 13. Filing amended tax return Los Formularios 499R-2/W-2PR y W-3PR SS-5-SP, Recordatorios, Tarjeta de Seguro Social del empleado. Filing amended tax return SS-8PR, Ayuda provista por el IRS. Filing amended tax return W-3PR, 13. Filing amended tax return Los Formularios 499R-2/W-2PR y W-3PR Formulario 944-PR descontinuado, Recordatorios Fotografías de niños desaparecidos, Recordatorios FUTA Ley Federal de Contribución para el Desempleo (FUTA). Filing amended tax return , Ley Federal de Contribución para el Desempleo (FUTA). Filing amended tax return Reducción en el crédito contra la contribución FUTA , Estados o territorios con reducción en el crédito. Filing amended tax return G Gastos de viaje y de representación, Gastos de viaje y de representación. Filing amended tax return I Individuos que no son empleados estatutarios, Individuos que no son empleados estatutarios. Filing amended tax return Agentes de bienes inmuebles autorizados, Agentes de bienes inmuebles autorizados. Filing amended tax return Personas a quienes se les paga por acompañar y posiblemente cuidar a otras, Personas a quienes se les paga por acompañar y posiblemente cuidar a otras. Filing amended tax return Vendedores directos, Vendedores directos. Filing amended tax return Introducción, Introduction L Líder de cuadrilla agrícola, Líder de cuadrilla agrícola. Filing amended tax return Los Formularios 499R-2/W-2PR y W-3PR, 13. Filing amended tax return Los Formularios 499R-2/W-2PR y W-3PR Problemas con la radicación electrónica, Problemas con la radicación electrónica. Filing amended tax return Radicación de Formularios 499R-2/W-2PR ante el Departamento de Hacienda, Radicación de Formularios 499R-2/W-2PR ante el Departamento de Hacienda. Filing amended tax return Solicitud de exención de radicación de declaraciones informativas por medios electrónicos, Solicitud de exención de radicación de declaraciones informativas por medios electrónicos. Filing amended tax return M Mantenimiento de récords, Recordatorios Matrimonio Matrimonio entre personas del mismo sexo. Filing amended tax return , Qué hay de nuevo Medicare Retención de la Contribución Adicional al Medicare , Retención de la Contribución Adicional al Medicare. Filing amended tax return Medios electrónicos, pago y radicación por, Recordatorios Multas relacionadas con los depósitos de la contribución al Seguro Social y al seguro  Medicare , Multas relacionadas con los depósitos. Filing amended tax return Agentes de reportación, Agentes de reportación. Filing amended tax return Multa por recuperación del fondo fiduciario, Multa por recuperación del fondo fiduciario. Filing amended tax return Multa promediada por no depositar, Multa promediada por no depositar. Filing amended tax return Orden en que se aplican los depósitos, Orden en que se aplican los depósitos. Filing amended tax return Regla especial para los que radicaron el Formulario 944(SP) anteriormente, Regla especial para los que radicaron el Formulario 944(SP) anteriormente. Filing amended tax return N Negocio perteneciente y administrado por cónyuges, Negocio que pertenece y es administrado por los cónyuges Excepción: Negocio en participación calificado, Excepción: Negocio en participación calificado. Filing amended tax return Nómina Externalización de las obligaciones de la nómina, Recordatorios Outsourcing payroll duties , Recordatorios Número de identificación de contribuyente individual (ITIN), Número de identificación personal del contribuyente (ITIN) del IRS para extranjeros. Filing amended tax return Número de identificación patronal (EIN), 3. Filing amended tax return Número de identificación patronal (EIN) Número de identificación patronal en linea (EIN), solicitud de un, Recordatorios Número de Seguro Social Dónde se obtienen los formularios , Dónde se obtienen los formularios para solicitar un Número de Seguro Social. Filing amended tax return Número de Seguro Social (SSN) , 4. Filing amended tax return Número de Seguro Social (SSN), Tarjeta de Seguro Social del empleado. Filing amended tax return Escriba correctamente el nombre y número de Seguro Social del empleado, Escriba correctamente el nombre y número de Seguro Social del empleado. Filing amended tax return Tarjeta de Seguro Social del empleado, Tarjeta de Seguro Social del empleado. Filing amended tax return Verificación de los números de Seguro Social, Verificación de los números de Seguro Social. Filing amended tax return P Pago por medios electrónicos, Recordatorios Pagos con tarjeta de crédito o débito, Recordatorios Pagos que no se consideran salarios Empleado doméstico, Pagos que no se consideran salarios. Filing amended tax return Transportación (beneficios de transporte), Transportación (beneficios de transporte). Filing amended tax return Pagos rechazados, Recordatorios Pagos y depósitos de la contribución FUTA , 10. Filing amended tax return Pagos y depósitos de la contribución federal para el desempleo (la contribución FUTA) Depósitos, Depósitos. Filing amended tax return Empleados domésticos, Empleados domésticos. Filing amended tax return Formulario 940-PR, Formulario 940-PR. Filing amended tax return Tasa de la contribución, Tasa de la contribución FUTA. Filing amended tax return Trabajadores agrícolas, Trabajadores agrícolas. Filing amended tax return Parte responsable Cambio de parte responsable, Qué hay de nuevo Patrono, definición, 1. Filing amended tax return ¿Quién es patrono? Planillas para patronos Formulario 944(SP), Formulario 944(SP). Filing amended tax return Multas por no radicar y por no pagar, Multas o penalidades. Filing amended tax return Patrono sucesor, Patrono sucesor. Filing amended tax return Patrono sucesor, crédito especial, Crédito especial para un patrono sucesor. Filing amended tax return Patronos de empleados domésticos que declaran las contribuciones al Seguro Social y al Medicare , Patronos de empleados domésticos que declaran las contribuciones al Seguro Social y al Medicare. Filing amended tax return Patronos de trabajadores agrícolas, Patronos de trabajadores agrícolas. Filing amended tax return Patronos que no son patronos agrícolas, Patronos que no son patronos agrícolas. Filing amended tax return Planilla anual y pago de la contribución federal para el desempleo (contribución  FUTA), Planilla anual y pago de la contribución federal para el desempleo (contribución FUTA). Filing amended tax return Programa de acuerdo voluntario para la clasificación de trabajadores (VCSP), Programa para el acuerdo de clasificación voluntaria de trabajadores (VCSP, por sus siglas en inglés). Filing amended tax return Propinas, 6. Filing amended tax return Propinas Formulario 4070-PR, 6. Filing amended tax return Propinas Formulario 4070A-PR, 6. Filing amended tax return Propinas Informe de propinas, Informe de propinas. Filing amended tax return Recaudación de las contribuciones sobre las propinas, Recaudación de las contribuciones sobre las propinas. Filing amended tax return Regla de disposición, Regla de disposición. Filing amended tax return Q Qué hay de nuevo Contribuciones al Medicare para 2014, Qué hay de nuevo Contribuciones al Seguro Social para 2014, Qué hay de nuevo R Radicación por medios electrónicos, Recordatorios Radicar el Formulario 944(SP) en vez del Formulario 941-PR, Recordatorios Recordatorios, Recordatorios Récords, Recordatorios Reglas especiales para varias clases de servicios y de pagos, 15. Filing amended tax return Reglas especiales para varias clases de servicios y de pagos Retención de la contribución federal sobre ingresos, 14. Filing amended tax return Retención de la contribución federal sobre ingresos S Salarios sujetos a la contribución Compensaciones sujetos a la contribución, 5. Filing amended tax return Salarios y otra compensación Servicio del Defensor del Contribuyente, Servicio del Defensor del Contribuyente. Filing amended tax return Servicios de entrega privados, Recordatorios T Tarjetas de crédito o débito, pagos con, Recordatorios TAS , Servicio del Defensor del Contribuyente. Filing amended tax return Trabajo doméstico, Trabajo doméstico. Filing amended tax return V Veteranos calificados, contratación, Recordatorios Visa H-2A, Trabajadores agrícolas. Filing amended tax return Remuneración pagada a trabajadores agrícolas con visa H-2A, Recordatorios Prev  Up     Home   More Online Publications
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Offshore Voluntary Disclosure Initiative: Passive Foreign Income Company Investment Computations

September 2010

A significant number of Offshore Voluntary Disclosure Practice (VDP) cases involve Passive Foreign Investment Company (PFIC) investments.  A lack of historical information on the cost basis and holding period of many PFIC investments makes it difficult for taxpayers to prepare statutory PFIC computations and for the Service to verify them.  As a result, resolution of many VDP cases is being unduly delayed.  Therefore, for purposes of this initiative, the Service is offering taxpayers an alternative to the statutory PFIC computation that will resolve PFIC issues on a basis that is consistent with the Mark to Market (MTM) methodology authorized in Internal Revenue Code section 1296 but will not require complete reconstruction of historical data.

The terms of this alternative resolution are as follows:

  • If elected, the alternative resolution will apply to all PFIC investments in cases that have been accepted into the VDP and that qualify for the special civil penalty framework announced by the IRS on March 23, 2009.  The initial MTM computation of gain or loss under this methodology will be for the first year of the VDP application but could be made after 2003 depending on when the first PFIC investment was made.  Generally, under the terms of the March 23, 2009 framework, the first year of the VDP application will be for the calendar year ending December 31, 2003.   This will require a determination of the basis for every PFIC investment, which should be agreed between the taxpayer and the Service based on the best available evidence. 


  • A tax rate of 20% will be applied to the MTM gain(s), MTM net gain(s) and gains from all PFIC dispositions during the VDP period, in lieu of the rate contained in section 1291(a)(1)(B) for the amount allocable to the current year and section 1291(c)(2) for the deferred tax amount(s) allocable to any other taxable year.

  • A rate of 7% of the tax computed for PFIC investments marked to market in the first year of the VDP application will be added to the tax for that year, in lieu of the interest charge mechanism described in sections 1291(c) and 1296(j).

  • MTM losses will be limited to unreversed inclusions (generally, previously reported MTM gains less allowed MTM losses) on an investment-by-investment basis in the same manner as section 1296. During the VDP period, these MTM losses will be treated as  ordinary losses (IRC 1296[c][1][B]) and the tax benefit is limited to the tax rate applicable to the MTM gains derived during the VDP period (20%).  This limitation is accomplished by multiplying the MTM loss by 20% and applying the result as a credit against the tax liability for the year.
     
  • Regular and Alternative Minimum Tax are both to be computed without the PFIC dispositions or MTM gains and losses.  The tax from the PFIC transactions (20% plus the 7% for 2003, if applicable) is added to (or subtracted from) the applicable total tax (either regular or AMT, whichever is higher).  The tax and interest (i.e., the 7% for the first year of the VDP) computed under the VDP alternative MTM can be added to the applicable total tax (either regular or AMT, whichever is higher) and placed on the amended return in the margin, with a supporting schedule.

  • Underpayment interest and penalties on the deficiency are computed in accordance with the Internal Revenue Code and the terms of the VDP.

  • For any PFIC investment retained beyond 12/31/2008, the taxpayer must continue using the MTM method, but will apply the normal statutory rules of section 1296 as well as the provisions of sections 1291-1298, as applicable.

Taxpayers should direct questions regarding PFICs and how the alternative resolution will affect their cases to the examiners assigned to their cases.  Before electing the alternative PFIC resolution, taxpayers with PFIC investments should consult their tax advisors to ensure that the issue is material in their cases and that the alternative is in fact preferable to the statutory computation in their situation.  If the taxpayer does not elect to use the alternative PFIC computation, then the PFIC provisions of section 1291-1298 apply. 

Page Last Reviewed or Updated: 09-Jan-2014

The Filing Amended Tax Return

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