Publication 523 (2023), Selling Your Home

Publication 523 explains the tax consequences of selling your home, including potential exclusions, calculating gains/losses, and reporting requirements. It offers clear guidance and helpful worksheets to simplify the process.

What is Publication 523?

This official IRS document explains the tax rules surrounding the sale or transfer of your home. It offers valuable information on claiming the home sale exclusion, which allows you to exclude a portion of your gain from taxable income.

Key Points to Remember About Publication 523

A. Eligibility Test: To claim the full exclusion (up to $250,000 for single filers, $500,000 for married filing jointly), you must have owned and lived in the home for at least 2 of the 5 years preceding the sale.

B. Partial Exclusion: If you don't meet the full 2-year test but owned the home for some time, you may qualify for a partial exclusion.

C. Calculating Gain or Loss: Publication 523 provides worksheets to help you determine your gain or loss on the sale. This involves subtracting your adjusted basis (purchase price + improvements - selling expenses) from the selling price.

D. Reporting: If you have a taxable gain, you report it on Form 1040. If you qualify for the exclusion, you generally don't need to report it.

E. Special Situations: The publication covers various scenarios like short sales, foreclosures, inherited homes, and transfers to spouses.

To access the current year's Publication 523- Selling Your Home, click here.