Selling expenses for a main home that was sold after divorce?

smoke14
smoke14 Member Posts: 1 Newcomer
in Situation & Life Changes

I received a 1099-S form for a home that I sold in 2024. It was bought in 2016 for $335,000 when married, and sold for $625,000 after divorce. Once the proceeds were split up, my portion was $143,000.

How should this be reported in the "Sale of Main Home" section? Should the "Selling expenses" just be the total sale price ($625,000) minus my proceeds ($143,000)… so $482,000?

I meet the requirements for the full exclusion of $250,000, so my understanding is that my taxable gain will be $0. But I want to make sure I'm inputting the right numbers.

Answers

  • WrenD
    WrenD FreeTaxUSA Agent Posts: 36

    Hello smoke14,

    Great question — and you're on the right track!

    1. Reporting the Sale:
    Since you received a Form 1099-S for the sale, the IRS requires you to report the transaction, even if you qualify for the full $250,000 exclusion and owe no tax. This is outlined in IRS Topic No. 701:​

    "If you receive an informational income-reporting document such as Form 1099-S... you must report the sale of the home even if the gain from the sale is excludable."

    2. Selling Expenses:
    Selling expenses are costs directly associated with selling your home, such as real estate commissions, advertising fees, legal fees, and title or escrow charges. They do not include amounts like mortgage payoffs or the portion of proceeds received after splitting with a former spouse. For detailed guidance, refer to IRS Publication 523, which provides worksheets to help you calculate your adjusted basis and gain.​

    3. Inputting Information:
    When entering information into tax software:

    • Sales Price: Enter your portion of the sale price of the home (for example, 312,500 if you are splitting it 50/50).
    • Selling Expenses: Input your portion of the actual selling expenses.
    • Purchase Information: Provide your portion of the original purchase price and any improvements made.​

    The software will use this information to calculate your gain and determine the exclusion amount.​

    4. Exclusion Eligibility:
    If you meet the ownership and use tests, you can exclude up to $250,000 of gain from the sale of your main home. Since your calculated gain is below this threshold, your taxable gain would be $0. However, because you received a 1099-S, it's important to report the sale to the IRS.

    For more detailed information, consult IRS Publication 523.

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