Sale of residence

The IRS provided tips for taxpayers who have sold or are about to sell their principal residence. In general, sellers can exclude up to $250,000 of the gain ($500,000 on a joint return) from income if they owned and used the home as their principal residence for two of the five years prior to the date of its sale. If all of the gain is excludable, the sale need not be reported; if part of the gain cannot be excluded, it must be reported on Form 1040 (Capital Gains and Losses). If the seller claimed the first-time homebuyer credit and the property is no longer used as the principal residence within 36 months of the date of purchase, the credit must be repaid. Finally, sellers should notify the IRS of their new address by filing Form 8822 (Change of Address). Summertime Tax Tip 2011-15.