Have a Tax Question? Ask a Tax Expert
You will need to report that sale transaction on your tax return - and definitely may prepare your tax return by yourself - you are NOT required to hire a tax preparer.
If you don't meet the eligibility test, you may still qualify for partial exclusion if you moved because of work, health, or an unforeseeable event.
You can qualify either by meeting a set of standard requirements (the “safe harbor” provisions) or by showing enough facts and circumstances to validate your claim.
If you are NOT eligible for exclusion - you will report the sale transaction on form 8949
You will report your adjusted basis in column (e) Cost or other basis.
Your adjusted basis will be original purchase cost PLUS improvements PLUS selling expenses (Realtor fees, etc)
Do not send any supporting documents with your tax return - just keep for your reference.Let me know if you need any help with reporting?
Just to be clear...
- there is no separate capital gains taxes - we are talking about INCOME taxes - and the gain is included into gross income for income tax purposes
- if you held the property more than a year - that gain is taxed at reduced rates which may be zero percent, 15% or 20% - depending on your total income, filing status, etc. These reduced rates are referred as long term capital gain tax rates.
- tax liability is calculated when the tax return is prepared - and based on TOTAL income, deductions, etc - not when income is received.
- what you are referring - is WITHHOLDING - not actual tax liability. The purpose of withholding to cover possible tax liability - that is calculated on your tax return - and may be more or less than withholding.
In most situations - there is NO withholding at closing unless you are a foreign.
Let me know if you need any help with reporting.