File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

2012 Tax Return Forms

1040ez FreeFree Tax PrepFree Income Tax FormsCan I Still File 2012 TaxesTurbotax For MilitaryFile For A Tax Extension FreeEarned Income Tax Credit Calculator2012 Free1040x File OnlineAmend Federal ReturnFile A Tax ExtensionPrintable Irs Tax Forms 2011Where Can I Get A 2012 Tax Form1040express2012 1040ez Tax FormPa Tax Forms 2011Can You E File 2012 Taxes NowMy Free TaxHow To Amend A Tax Return 2012Filing 1040x Electronically1040ez Tax Return Forms 20131040 SHttps Www Freefilefillableforms Com Ffa Checkstatus Htm2010 Irs 1040ez Form1040x 2012 Form1040nr Ez TurbotaxFile Amended Tax Return 2010Amended Tax ReturnsFile Taxes 2010 FreeAmend Taxes1040ez.govTaxes 2012 FormsMilitary Income TaxHow Do I File Taxes For 20121040nr Ez DownloadDownload Irs Form 1040x2012 Tax Forms FederalFile State Tax Free1040-xFiling For State TaxesFree State Taxes File

2012 Tax Return Forms

2012 tax return forms Index , Hardest Hit Fund and Emergency Homeowners' Loan Programs. 2012 tax return forms , Form 1098. 2012 tax return forms , How To Report, Form 1098. 2012 tax return forms A Acquisition debt, Fully deductible interest. 2012 tax return forms , Home Acquisition Debt, Part of home not a qualified home. 2012 tax return forms Alimony, Divorced or separated individuals. 2012 tax return forms Amortization Points, General Rule Appraisal fees, Amounts charged for services. 2012 tax return forms Armed forces Housing allowance, Ministers' and military housing allowance. 2012 tax return forms Assistance (see Tax help) Average mortgage balance, Average Mortgage Balance B Borrowers More than one, More than one borrower. 2012 tax return forms Seller-paid points, treatment by buyer, Treatment by buyer. 2012 tax return forms Business Average mortgage balance, total amount of interest otherwise allowable to each activity, Line 13 Mortgage proceeds used for, Mortgage proceeds used for business or investment. 2012 tax return forms C Clergy Ministers' and military housing allowance, Ministers' and military housing allowance. 2012 tax return forms Cooperative housing, Cooperative apartment owner. 2012 tax return forms , Cooperative apartment owner. 2012 tax return forms , Special Rule for Tenant-Stockholders in Cooperative Housing Corporations, Form 1098. 2012 tax return forms Cost of home or improvements, Cost of home or improvements. 2012 tax return forms Credits, Mortgage interest credit. 2012 tax return forms D Date of mortgage, Date of the mortgage. 2012 tax return forms Debt Choice to treat as not secured by home, Choice to treat the debt as not secured by your home. 2012 tax return forms Grandfathered, Fully deductible interest. 2012 tax return forms , Grandfathered Debt, Line-of-credit mortgage. 2012 tax return forms Home acquisition, Fully deductible interest. 2012 tax return forms , Home Acquisition Debt Home equity, Fully deductible interest. 2012 tax return forms , Home Equity Debt Home equity only (Table 1), Home equity debt only. 2012 tax return forms Not secured by home, Debt not secured by home. 2012 tax return forms Secured, Secured Debt Deductions, Part I. 2012 tax return forms Home Mortgage Interest, Hardest Hit Fund and Emergency Homeowners' Loan Programs. 2012 tax return forms Home office, Office in home. 2012 tax return forms Mortgage insurance premiums, Claiming your deductible mortgage insurance premiums. 2012 tax return forms Points, General Rule, Claiming your deductible points. 2012 tax return forms Deed preparation costs, Amounts charged for services. 2012 tax return forms Divorced taxpayers, Divorced or separated individuals. 2012 tax return forms , Acquiring an interest in a home because of a divorce. 2012 tax return forms E Emergency Homeowners' Loan Program, Hardest Hit Fund and Emergency Homeowners' Loan Programs. 2012 tax return forms Equity debt, Fully deductible interest. 2012 tax return forms , Home Equity Debt, Fair market value (FMV). 2012 tax return forms Equity debt only (Table 1), Home equity debt only. 2012 tax return forms F Fair market value (FMV), Fair market value (FMV). 2012 tax return forms Fees Appraisal, Amounts charged for services. 2012 tax return forms Notaries, Amounts charged for services. 2012 tax return forms Points (see Points) Figures (see Tables and figures) Form 1040, Schedule A, How To Report, Table 2. 2012 tax return forms Where To Deduct Your Interest Expense Form 1040, Schedule C or C-EZ, Table 2. 2012 tax return forms Where To Deduct Your Interest Expense Form 1040, Schedule E, Table 2. 2012 tax return forms Where To Deduct Your Interest Expense Form 1040, Schedule F, Table 2. 2012 tax return forms Where To Deduct Your Interest Expense Form 1098, Form 1098, Mortgage Interest Statement Mortgage insurance premiums, Form 1098. 2012 tax return forms Form 8396, Mortgage interest credit. 2012 tax return forms Free tax services, Free help with your tax return. 2012 tax return forms G Grandfathered debt, Fully deductible interest. 2012 tax return forms , Grandfathered Debt, Line-of-credit mortgage. 2012 tax return forms Ground rents, Redeemable ground rents. 2012 tax return forms H Hardest Hit Fund Program, Hardest Hit Fund and Emergency Homeowners' Loan Programs. 2012 tax return forms Help (see Tax help) Home, Publication 936 - Introductory Material Acquisition debt, Fully deductible interest. 2012 tax return forms , Home Acquisition Debt Construction, Home under construction. 2012 tax return forms Cost of, Cost of home or improvements. 2012 tax return forms Destroyed, Home destroyed. 2012 tax return forms Divided use, Divided use of your home. 2012 tax return forms , Part of home not a qualified home. 2012 tax return forms , Part of home not a qualified home. 2012 tax return forms Equity debt, Fully deductible interest. 2012 tax return forms , Home Equity Debt Equity debt only (Table 1), Home equity debt only. 2012 tax return forms Fair market value, Fair market value (FMV). 2012 tax return forms Grandfathered debt, Fully deductible interest. 2012 tax return forms , Grandfathered Debt, Line-of-credit mortgage. 2012 tax return forms Improvement loan, points, Home improvement loan. 2012 tax return forms Main, Main home. 2012 tax return forms Office in, Office in home. 2012 tax return forms Qualified, Qualified Home Renting out part of, Renting out part of home. 2012 tax return forms Sale of, Sale of home. 2012 tax return forms Second, Second home. 2012 tax return forms Time-sharing arrangements, Time-sharing arrangements. 2012 tax return forms Housing allowance Ministers and military, Ministers' and military housing allowance. 2012 tax return forms I Improvements Cost of, Cost of home or improvements. 2012 tax return forms Home acquisition debt, Mortgage treated as used to buy, build, or improve home. 2012 tax return forms Points, Home improvement loan. 2012 tax return forms Substantial, Substantial improvement. 2012 tax return forms Interest, Part I. 2012 tax return forms Home Mortgage Interest (see also Mortgage interest) Interest rate method, Interest paid divided by interest rate method. 2012 tax return forms Refunded, Refunds of interest. 2012 tax return forms , Refunded interest. 2012 tax return forms Where to deduct, Table 2. 2012 tax return forms Where To Deduct Your Interest Expense Investments Average mortgage balance and total amount of interest allowable, Line 13 Mortgage proceeds used for, Mortgage proceeds invested in tax-exempt securities. 2012 tax return forms , Mortgage proceeds used for business or investment. 2012 tax return forms J Joint returns, Married taxpayers. 2012 tax return forms L Lender mortgage statements, Statements provided by your lender. 2012 tax return forms Limits Cooperative housing, mortgage interest deduction, Limits on deduction. 2012 tax return forms Deductibility of mortgage insurance premiums, Limit on deduction. 2012 tax return forms Deductibility of points, Limits on deduction. 2012 tax return forms Home acquisition debt, Home acquisition debt limit. 2012 tax return forms Home equity debt, Home equity debt limit. 2012 tax return forms Home mortgage interest deduction, Form 1098. 2012 tax return forms Qualified loan limit, Table 1. 2012 tax return forms Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. 2012 tax return forms , Average Mortgage Balance Line-of-credit mortgage, Line-of-credit mortgage. 2012 tax return forms Loans, Mortgage proceeds used for business or investment. 2012 tax return forms , Mortgage treated as used to buy, build, or improve home. 2012 tax return forms (see also Mortgages) Home improvement, points, Home improvement loan. 2012 tax return forms Qualified loan limit, Table 1. 2012 tax return forms Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. 2012 tax return forms M Main home, Main home. 2012 tax return forms Married taxpayers, Married taxpayers. 2012 tax return forms Military housing allowance, Ministers' and military housing allowance. 2012 tax return forms Ministers' housing allowance, Ministers' and military housing allowance. 2012 tax return forms Missing children, photographs of, Reminders Mixed-use mortgages, Mixed-use mortgages. 2012 tax return forms Mortgage insurance premiums Claiming deductible, Claiming your deductible mortgage insurance premiums. 2012 tax return forms Mortgage interest, Publication 936 - Introductory Material, Part I. 2012 tax return forms Home Mortgage Interest Cooperative housing, Figuring deductible home mortgage interest. 2012 tax return forms Credit, Mortgage interest credit. 2012 tax return forms Fully deductible interest, Fully deductible interest. 2012 tax return forms Home mortgage interest, Part I. 2012 tax return forms Home Mortgage Interest, Hardest Hit Fund and Emergency Homeowners' Loan Programs. 2012 tax return forms How to report, How To Report Late payment charges, Late payment charge on mortgage payment. 2012 tax return forms Limits on deduction, Part II. 2012 tax return forms Limits on Home Mortgage Interest Deduction Ministers' and military housing allowance, Ministers' and military housing allowance. 2012 tax return forms Prepaid interest, Prepaid interest. 2012 tax return forms , Prepaid interest on Form 1098. 2012 tax return forms Prepayment penalty, Mortgage prepayment penalty. 2012 tax return forms Refunds, Refunds of interest. 2012 tax return forms , Refunded interest. 2012 tax return forms Sale of home, Sale of home. 2012 tax return forms Special situations, Special Situations Statement, Form 1098, Mortgage Interest Statement Where to deduct, Table 2. 2012 tax return forms Where To Deduct Your Interest Expense Worksheet to figure (Table 1), Table 1. 2012 tax return forms Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. 2012 tax return forms Mortgages Assistance payments (under sec. 2012 tax return forms 235 of National Housing Act), Mortgage assistance payments under section 235 of the National Housing Act. 2012 tax return forms Average balance, Average Mortgage Balance Date of, Date of the mortgage. 2012 tax return forms Ending early, Mortgage ending early. 2012 tax return forms Late qualifying, Mortgage that qualifies later. 2012 tax return forms Line-of-credit, Line-of-credit mortgage. 2012 tax return forms Mixed-use, Mixed-use mortgages. 2012 tax return forms Preparation costs for note or deed of trust, Amounts charged for services. 2012 tax return forms Proceeds invested in tax-exempt securities, Mortgage proceeds invested in tax-exempt securities. 2012 tax return forms Proceeds used for business, Mortgage proceeds used for business or investment. 2012 tax return forms Proceeds used for investment, Mortgage proceeds used for business or investment. 2012 tax return forms Qualified loan limit, Table 1. 2012 tax return forms Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. 2012 tax return forms , Average Mortgage Balance Refinanced, Refinancing. 2012 tax return forms , Refinanced home acquisition debt. 2012 tax return forms , Refinanced grandfathered debt. 2012 tax return forms Reverse, Reverse mortgages. 2012 tax return forms Statements provided by lender, Statements provided by your lender. 2012 tax return forms To buy, build, or improve, Mortgage treated as used to buy, build, or improve home. 2012 tax return forms Wraparound, Wraparound mortgage. 2012 tax return forms N Nonredeemable ground rents, Nonredeemable ground rents. 2012 tax return forms Notary fees, Amounts charged for services. 2012 tax return forms O Office in home, Office in home. 2012 tax return forms P Penalties Mortgage prepayment, Mortgage prepayment penalty. 2012 tax return forms Points, Points, Deduction Allowed in Year Paid, Form 1098. 2012 tax return forms Claiming deductible, Claiming your deductible points. 2012 tax return forms Exception to general rule, Deduction Allowed in Year Paid Excess, Excess points. 2012 tax return forms Funds provided less than, Funds provided are less than points. 2012 tax return forms General rule, General Rule Home improvement loans, Home improvement loan. 2012 tax return forms Seller paid, Points paid by the seller. 2012 tax return forms Prepaid interest, Prepaid interest. 2012 tax return forms , Prepaid interest on Form 1098. 2012 tax return forms Prepayment penalties, Mortgage prepayment penalty. 2012 tax return forms Publications (see Tax help) Q Qualified homes, Qualified Home Qualified loan limit Average mortgage balance, Average Mortgage Balance Worksheet to figure (Table 1), Table 1. 2012 tax return forms Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. 2012 tax return forms R Redeemable ground rents, Redeemable ground rents. 2012 tax return forms Refinancing, Refinancing. 2012 tax return forms Grandfathered debt, Refinanced grandfathered debt. 2012 tax return forms Home acquisition debt, Refinanced home acquisition debt. 2012 tax return forms Refunds, Refunds of interest. 2012 tax return forms , Refunded interest. 2012 tax return forms Rent Nonredeemable ground rents, Nonredeemable ground rents. 2012 tax return forms Redeemable ground rents, Redeemable ground rents. 2012 tax return forms Rental payments, Rental payments. 2012 tax return forms Renting of home Part of, Renting out part of home. 2012 tax return forms Time-sharing arrangements, Rental of time-share. 2012 tax return forms Repairs, Substantial improvement. 2012 tax return forms Reverse Mortgages, Reverse mortgages. 2012 tax return forms S Sale of home, Sale of home. 2012 tax return forms Second home, Second home. 2012 tax return forms , Deduction Allowed in Year Paid Secured debt, Secured Debt Seller-paid points, Points paid by the seller. 2012 tax return forms Separate returns, Separate returns. 2012 tax return forms Separated taxpayers, Divorced or separated individuals. 2012 tax return forms Spouses, Married taxpayers. 2012 tax return forms Statements provided by lender, Statements provided by your lender. 2012 tax return forms Stock Cooperative housing, Stock used to secure debt. 2012 tax return forms T Tables and figures Deductible home mortgage interest Fully deductible, determination of (Figure A), Fully deductible interest. 2012 tax return forms How to figure (Table 1), Table 1. 2012 tax return forms Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. 2012 tax return forms Mortgage to buy, build, or improve home (Figure C), Mortgage treated as used to buy, build, or improve home. 2012 tax return forms Points (Figure B), Points Qualified loan limit worksheet (Table 1), Table 1. 2012 tax return forms Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. 2012 tax return forms Tax credits, Mortgage interest credit. 2012 tax return forms Tax help, How To Get Tax Help Tax-exempt securities Mortgage proceeds invested in, Mortgage proceeds invested in tax-exempt securities. 2012 tax return forms Time-sharing arrangements, Time-sharing arrangements. 2012 tax return forms V Valuation Fair market value, Fair market value (FMV). 2012 tax return forms W Worksheets Deductible home mortgage interest, Table 1. 2012 tax return forms Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. 2012 tax return forms Qualified loan limit, Table 1. 2012 tax return forms Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. 2012 tax return forms Wraparound mortgages, Wraparound mortgage. 2012 tax return forms Prev  Up     Home   More Online Publications
Español

Better Business Bureaus (BBBs) are nonprofit organizations that encourage honest advertising and selling practices and are supported primarily by local businesses. They offer a variety of consumer services, including consumer education materials; business reports, particularly unanswered or unsettled complaints or other problems; mediation and arbitration services; and information about charities and other organizations that are seeking public donations. They also provide ratings (A, B, C, D, or F) of local companies to express the BBB's confidence that the company operates in a trustworthy manner and demonstrates a willingness to resolve customer concerns.

Little Rock, AR

Website: Better Business Bureau

Email: info@arkansas.bbb.org

Address: Better Business Bureau
12521 Kanis Rd.
Little Rock, AR 72211

Phone Number: 501-664-7274

The 2012 Tax Return Forms

2012 tax return forms Publication 523 - Main Content Table of Contents Main HomeVacant land. 2012 tax return forms Factors used to determine main home. 2012 tax return forms Figuring Gain or LossSelling Price Amount Realized Adjusted Basis Amount of Gain or Loss Dispositions Other Than Sales Determining BasisCost As Basis Basis Other Than Cost Adjusted Basis Excluding the GainMaximum Exclusion Ownership and Use Tests Reduced Maximum Exclusion Nonqualified Use Business Use or Rental of HomeUnrecaptured section 1250 gain. 2012 tax return forms Property Used Partly for Business or Rental Reporting the SaleSeller-financed mortgage. 2012 tax return forms Individual taxpayer identification number (ITIN). 2012 tax return forms More information. 2012 tax return forms Comprehensive Examples Special SituationsException for sales to related persons. 2012 tax return forms Deducting Taxes in the Year of SaleForm 1099-S. 2012 tax return forms More information. 2012 tax return forms Recapturing (Paying Back) a Federal Mortgage Subsidy Recapture of First-Time Homebuyer CreditExample. 2012 tax return forms Worksheets How To Get Tax HelpLow Income Taxpayer Clinics Main Home This section explains the term “main home. 2012 tax return forms ” 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. 2012 tax return forms To exclude gain under the rules in this publication, 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. 2012 tax return forms Land. 2012 tax return forms   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. 2012 tax return forms Example. 2012 tax return forms You buy a piece of land and move your main home to it. 2012 tax return forms Then, you sell the land on which your main home was located. 2012 tax return forms This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. 2012 tax return forms Vacant land. 2012 tax return forms   The sale of vacant land is not a sale of your main home unless: The vacant land is adjacent to land containing your home, You owned and used the vacant land as part of your main home, The separate sale of your home satisfies the requirements for exclusion and occurs within 2 years before or 2 years after the date of the sale of the vacant land, and The other requirements for excluding gain from the sale of a main home have been satisfied with respect to the vacant land. 2012 tax return forms If these requirements are met, the sale of the home and the sale of the vacant land are treated as one sale and only one maximum exclusion can be applied to any gain. 2012 tax return forms See Excluding the Gain , later. 2012 tax return forms The destruction of your home is treated as a sale of your home. 2012 tax return forms As a result, you may be able to meet these requirements if you sell vacant land used as a part of your main home within 2 years from the date of the destruction of your main home. 2012 tax return forms For information, see Publication 547. 2012 tax return forms More than one home. 2012 tax return forms   If you have more than one home, you can exclude gain only from the sale of your main home. 2012 tax return forms You must include in income the gain from the sale of any other home. 2012 tax return forms If you have two homes and live in each of them, your main home is ordinarily the one you live in most of the time during the year. 2012 tax return forms Example 1. 2012 tax return forms You own two homes, one in New York and one in Florida. 2012 tax return forms 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. 2012 tax return forms In the absence of facts and circumstances indicating otherwise, the New York home is your main home. 2012 tax return forms You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. 2012 tax return forms Example 2. 2012 tax return forms You own a house, but you live in another house that you rent. 2012 tax return forms The rented house is your main home. 2012 tax return forms Example 3. 2012 tax return forms You own two homes, one in Virginia and one in New Hampshire. 2012 tax return forms In 2009 and 2010, you lived in the Virginia home. 2012 tax return forms In 2011 and 2012, you lived in the New Hampshire home. 2012 tax return forms In 2013, you lived again in the Virginia home. 2012 tax return forms Your main home in 2009, 2010, and 2013 is the Virginia home. 2012 tax return forms Your main home in 2011 and 2012 is the New Hampshire home. 2012 tax return forms You would be eligible to exclude gain from the sale of either home (but not both) in 2013. 2012 tax return forms Factors used to determine main home. 2012 tax return forms   In addition to the amount of time you live in each home, other factors are relevant in determining which home is your main home. 2012 tax return forms Those factors include the following. 2012 tax return forms Your place of employment. 2012 tax return forms The location of your family members' main home. 2012 tax return forms Your mailing address for bills and correspondence. 2012 tax return forms The address listed on your: Federal and state tax returns, Driver's license, Car registration, and Voter registration card. 2012 tax return forms The location of the banks you use. 2012 tax return forms The location of recreational clubs and religious organizations of which you are a member. 2012 tax return forms Property used partly as your main home. 2012 tax return forms   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. 2012 tax return forms For details, see Business Use or Rental of Home , later. 2012 tax return forms 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. 2012 tax return forms Subtract the adjusted basis from the amount realized to get your gain or loss. 2012 tax return forms     Selling price     − Selling expenses       Amount realized     − Adjusted basis       Gain or loss   Gain. 2012 tax return forms   Gain is the excess of the amount realized over the adjusted basis of the property. 2012 tax return forms Loss. 2012 tax return forms   Loss is the excess of the adjusted basis over the amount realized for the property. 2012 tax return forms Selling Price The selling price is the total amount you receive for your home. 2012 tax return forms 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. 2012 tax return forms Personal property. 2012 tax return forms   The selling price of your home does not include amounts you received for personal property sold with your home. 2012 tax return forms Personal property is property that is not a permanent part of the home. 2012 tax return forms Examples are furniture, draperies, rugs, a washer and dryer, and lawn equipment. 2012 tax return forms Separately stated amounts you received for these items should not be shown on Form 1099-S (discussed later). 2012 tax return forms Any gains from sales of personal property must be included in your income, but not as part of the sale of your home. 2012 tax return forms Payment by employer. 2012 tax return forms   You may have to sell your home because of a job transfer. 2012 tax return forms 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. 2012 tax return forms 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, or on Form 1040NR, line 8. 2012 tax return forms Option to buy. 2012 tax return forms   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. 2012 tax return forms If the option is not exercised, you must report the amount as ordinary income in the year the option expires. 2012 tax return forms Report this amount on Form 1040, line 21, or on Form 1040NR, line 21. 2012 tax return forms Form 1099-S. 2012 tax return forms   If you received Form 1099-S, box 2 (gross proceeds) should show the total amount you received for your home. 2012 tax return forms   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. 2012 tax return forms Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. 2012 tax return forms Amount Realized The amount realized is the selling price minus selling expenses. 2012 tax return forms Selling expenses. 2012 tax return forms   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. 2012 tax return forms ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. 2012 tax return forms This adjusted basis must be determined before you can figure gain or loss on the sale of your home. 2012 tax return forms For information on how to figure your home's adjusted basis, see Determining Basis , later. 2012 tax return forms Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. 2012 tax return forms Gain on sale. 2012 tax return forms   If the amount realized is more than the adjusted basis, the difference is a gain and, except for any part you can exclude, generally is taxable. 2012 tax return forms Loss on sale. 2012 tax return forms   If the amount realized is less than the adjusted basis, the difference is a loss. 2012 tax return forms Generally, a loss on the sale of your main home cannot be deducted. 2012 tax return forms Jointly owned home. 2012 tax return forms   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. 2012 tax return forms Separate returns. 2012 tax return forms   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. 2012 tax return forms Your ownership interest is generally determined by state law. 2012 tax return forms Joint owners not married. 2012 tax return forms   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. 2012 tax return forms Each of you applies the rules discussed in this publication on an individual basis. 2012 tax return forms Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. 2012 tax return forms Foreclosure or repossession. 2012 tax return forms   If your home was foreclosed on or repossessed, you have a disposition. 2012 tax return forms See Publication 4681 to determine if you have ordinary income, gain, or loss. 2012 tax return forms More information. 2012 tax return forms   If part of a home is used for business or rental purposes, see Foreclosures and Repossessions in chapter 1 of Publication 544 for more information. 2012 tax return forms Publication 544 has examples of how to figure gain or loss on a foreclosure or repossession. 2012 tax return forms Abandonment. 2012 tax return forms   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. 2012 tax return forms Trading (exchanging) homes. 2012 tax return forms   If you trade your home for another home, treat the trade as a sale and a purchase. 2012 tax return forms Example. 2012 tax return forms You owned and lived in a home with an adjusted basis of $41,000. 2012 tax return forms 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. 2012 tax return forms This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 − $41,000). 2012 tax return forms 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). 2012 tax return forms Transfer to spouse. 2012 tax return forms   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 (unless the Exception, discussed next, applies). 2012 tax return forms This is true even if you receive cash or other consideration for the home. 2012 tax return forms As a result, the rules explained in this publication do not apply. 2012 tax return forms   If you owned your home jointly with your spouse and transfer your interest in the home to your spouse, or to your former spouse incident to your divorce, the same rule applies. 2012 tax return forms You have no gain or loss. 2012 tax return forms Exception. 2012 tax return forms   These transfer rules do not apply if your spouse or former spouse is a nonresident alien. 2012 tax return forms In that case, you generally will have a gain or loss. 2012 tax return forms More information. 2012 tax return forms    See Property Settlements in Publication 504, Divorced or Separated Individuals, for more information. 2012 tax return forms Involuntary conversion. 2012 tax return forms   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. 2012 tax return forms 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 (see Home destroyed or condemned ). 2012 tax return forms Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. 2012 tax return forms Your basis in your home is determined by how you got the home. 2012 tax return forms Generally, your basis is its cost if you bought it or built it. 2012 tax return forms If you got it in some other way (inheritance, gift, etc. 2012 tax return forms ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. 2012 tax return forms While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. 2012 tax return forms 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. 2012 tax return forms To figure your adjusted basis, you can use Worksheet 1, near the end of this publication. 2012 tax return forms Filled-in examples of that worksheet are included in the Comprehensive Examples , later. 2012 tax return forms Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. 2012 tax return forms Purchase. 2012 tax return forms   If you bought your home, your basis is its cost to you. 2012 tax return forms This includes the purchase price and certain settlement or closing costs. 2012 tax return forms 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. 2012 tax return forms If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed later. 2012 tax return forms Seller-paid points. 2012 tax return forms   If the person who sold you your home paid points on your loan, you may have to reduce your home's basis by the amount of the points, as shown in the following chart. 2012 tax return forms    IF you bought your home. 2012 tax return forms . 2012 tax return forms . 2012 tax return forms THEN reduce your home's basis by the seller-paid points. 2012 tax return forms . 2012 tax return forms . 2012 tax return forms after 1990 but before April 4, 1994 only if you deducted them as home mortgage interest in the year paid. 2012 tax return forms after April 3, 1994 even if you did not deduct them. 2012 tax return forms Settlement fees or closing costs. 2012 tax return forms   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. 2012 tax return forms 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. 2012 tax return forms 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). 2012 tax return forms   Settlement fees do not include amounts placed in escrow for the future payment of items such as taxes and insurance. 2012 tax return forms   Some of the settlement fees or closing costs that you can include in your basis are: Abstract fees (abstract of title fees), Charges for installing utility services, Legal fees (including fees for the title search and preparing the sales contract and deed), Recording fees, Survey fees, Transfer or stamp taxes, Owner's title insurance, and Any amounts the seller owes that you agree to pay, such as: Certain real estate taxes (discussed later), Back interest, Recording or mortgage fees, Charges for improvements or repairs, and Sales commissions. 2012 tax return forms   Some settlement fees and closing costs you cannot include in your basis are: Fire insurance premiums, Rent for occupancy of the house before closing, Charges for utilities or other services related to occupancy of the house before closing, Any fee or cost that you deducted as a moving expense (allowed for certain fees and costs before 1994), Charges connected with getting a mortgage loan, such as: Mortgage insurance premiums (including funding fees connected with loans guaranteed by the Department of Veterans Affairs), Loan assumption fees, Cost of a credit report, Fee for an appraisal required by a lender, and Fees for refinancing a mortgage. 2012 tax return forms Real estate taxes. 2012 tax return forms   Real estate taxes for the year you bought your home may affect your basis, as shown in the following chart. 2012 tax return forms    IF. 2012 tax return forms . 2012 tax return forms . 2012 tax return forms AND. 2012 tax return forms . 2012 tax return forms . 2012 tax return forms THEN the taxes. 2012 tax return forms . 2012 tax return forms . 2012 tax return forms you pay taxes that the seller owed on the home up to the date of sale the seller does not reimburse you are added to the basis of your home. 2012 tax return forms the seller reimburses you do not affect the basis of your home. 2012 tax return forms the seller pays taxes for you (taxes owed beginning on the date of sale) you do not reimburse the seller are subtracted from the basis of your home. 2012 tax return forms you reimburse the seller do not affect the basis of your home. 2012 tax return forms Construction. 2012 tax return forms   If you contracted to have your house built on land you own, your basis is: The cost of the land, plus The amount it cost you to complete the house, including: The cost of labor and materials, Any amounts paid to a contractor, Any architect's fees, Building permit charges, Utility meter and connection charges, and Legal fees directly connected with building the house. 2012 tax return forms   Your cost includes your down payment and any debt such as a first or second mortgage or notes you gave the seller or builder. 2012 tax return forms It also includes certain settlement or closing costs. 2012 tax return forms You may have to reduce your basis by points the seller paid for you. 2012 tax return forms For more information, see Seller-paid points and Settlement fees or closing costs , earlier. 2012 tax return forms Built by you. 2012 tax return forms   If you built all or part of your house yourself, its basis is the total amount it cost you to complete it. 2012 tax return forms Do not include in the cost of the house: The value of your own labor, or The value of any other labor you did not pay for. 2012 tax return forms Temporary housing. 2012 tax return forms   If a builder gave you temporary housing while your home was being finished, you must reduce your basis by the part of the contract price that was for the temporary housing. 2012 tax return forms To figure the amount of the reduction, multiply the contract price by a fraction. 2012 tax return forms The numerator is the value of the temporary housing, and the denominator is the sum of the value of the temporary housing plus the value of the new home. 2012 tax return forms Cooperative apartment. 2012 tax return forms   If you are a tenant-stockholder in a cooperative housing corporation, your basis in the cooperative apartment used as your home is usually the cost of your stock in the corporation. 2012 tax return forms This may include your share of a mortgage on the apartment building. 2012 tax return forms Condominium. 2012 tax return forms   To determine your basis in a condominium apartment used as your home, use the same rules as for any other home. 2012 tax return forms Basis Other Than Cost You must use a basis other than cost, such as adjusted basis or fair market value, if you received your home as a gift, inheritance, a trade, or from your spouse. 2012 tax return forms These situations are discussed in the following pages. 2012 tax return forms Also, the instructions for Worksheet 1 (near the end of the publication) address each of these issues. 2012 tax return forms Other special rules may apply in certain situations. 2012 tax return forms If you converted the property, or some part of it, to business or rental use, see Property Changed to Business or Rental Use, in Publication 551. 2012 tax return forms Home received as gift. 2012 tax return forms   Use the following chart to find the basis of a home you received as a gift. 2012 tax return forms IF the donor's adjusted basis at the time of the gift was. 2012 tax return forms . 2012 tax return forms . 2012 tax return forms THEN your basis is. 2012 tax return forms . 2012 tax return forms . 2012 tax return forms more than the fair market value of the home at that time the same as the donor's adjusted basis at the time of the gift. 2012 tax return forms   Exception: If using the donor's adjusted basis results in a loss when you sell the home, you must use the fair market value of the home at the time of the gift as your basis. 2012 tax return forms If using the fair market value results in a gain, you have neither gain nor loss. 2012 tax return forms equal to or less than the fair market value at that time, and you received the gift before 1977 the smaller of the: • donor's adjusted basis, plus  any federal gift tax paid on  the gift, or • the home's fair market value  at the time of the gift. 2012 tax return forms equal to or less than the fair market value at that time, and you received the gift after 1976 the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home (explained next). 2012 tax return forms Fair market value. 2012 tax return forms   The fair market value of property at the time of the gift is the value of the property as appraised for purposes of the federal gift tax. 2012 tax return forms If the gift was not subject to the federal gift tax, the fair market value is the value as appraised for the purposes of a state gift tax. 2012 tax return forms Part of federal gift tax due to net increase in value. 2012 tax return forms   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. 2012 tax return forms The numerator of the fraction is the net increase in the value of the home, and the denominator is the value of the home for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. 2012 tax return forms The net increase in the value of the home is its fair market value minus the donor's adjusted basis immediately before the gift. 2012 tax return forms Home acquired from a decedent who died before or after 2010. 2012 tax return forms   If you inherited your home from a decedent who died before or after 2010, your basis is the fair market value of the property on the date of the decedent's death (or the later alternate valuation date chosen by the personal representative of the estate). 2012 tax return forms If an estate tax return was filed or required to be filed, the value of the property listed on the estate tax return is your basis. 2012 tax return forms If a federal estate tax return did not have to be filed, your basis in the home is the same as its appraised value at the date of death, for purposes of state inheritance or transmission taxes. 2012 tax return forms Surviving spouse. 2012 tax return forms   If you are a surviving spouse and you owned your home jointly, your basis in the home will change. 2012 tax return forms The new basis for the interest your spouse owned will be its fair market value on the date of death (or alternate valuation date). 2012 tax return forms The basis in your interest will remain the same. 2012 tax return forms Your new basis in the home is the total of these two amounts. 2012 tax return forms   If you and your spouse owned the home either as tenants by the entirety or as joint tenants with right of survivorship, you will each be considered to have owned one-half of the home. 2012 tax return forms Example. 2012 tax return forms Your jointly owned home (owned as joint tenants with right of survivorship) had an adjusted basis of $50,000 on the date of your spouse's death, and the fair market value on that date was $100,000. 2012 tax return forms Your new basis in the home is $75,000 ($25,000 for one-half of the adjusted basis plus $50,000 for one-half of the fair market value). 2012 tax return forms Community property. 2012 tax return forms   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), each spouse is usually considered to own half of the community property. 2012 tax return forms When either spouse dies, the total fair market value of the community property becomes the basis of the entire property, including the part belonging to the surviving spouse. 2012 tax return forms For this to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. 2012 tax return forms   For more information about community property, see Publication 555, Community Property. 2012 tax return forms    If you are selling a home in which you acquired an interest from a decedent who died in 2010, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your basis. 2012 tax return forms Home received as trade. 2012 tax return forms   If you acquired your home as a trade for other property, in most cases, the basis of your home is the fair market value (at the time of the trade) of the property you gave up. 2012 tax return forms If you traded one home for another, you have made a sale and purchase. 2012 tax return forms In that case, you may have a gain. 2012 tax return forms See Trading (exchanging) homes under Dispositions Other Than Sales, earlier, for an example of figuring the gain. 2012 tax return forms Home received from spouse. 2012 tax return forms   If you received your home from your spouse or from your former spouse incident to your divorce, your basis in the home depends on the date of the transfer. 2012 tax return forms Transfers after July 18, 1984. 2012 tax return forms   If you received the home after July 18, 1984, there was no gain or loss on the transfer. 2012 tax return forms In most cases, your basis in this home is the same as your spouse's (or former spouse's) adjusted basis just before you received it. 2012 tax return forms This rule applies even if you received the home in exchange for cash, the release of marital rights, the assumption of liabilities, or other considerations. 2012 tax return forms   If you owned a home jointly with your spouse and your spouse transferred his or her interest in the home to you, in most cases, your basis in the half interest received from your spouse is the same as your spouse's adjusted basis just before the transfer. 2012 tax return forms This also applies if your former spouse transferred his or her interest in the home to you incident to your divorce. 2012 tax return forms Your basis in the half interest you already owned does not change. 2012 tax return forms Your new basis in the home is the total of these two amounts. 2012 tax return forms Transfers before July 19, 1984. 2012 tax return forms   If you received your home before July 19, 1984, in exchange for your release of marital rights, in most cases, your basis in the home is generally its fair market value at the time you received it. 2012 tax return forms More information. 2012 tax return forms   For more information on property received from a spouse or former spouse, see Property Settlements in Publication 504. 2012 tax return forms Involuntary conversion. 2012 tax return forms   If your home is destroyed or condemned, you may receive insurance proceeds or a condemnation award. 2012 tax return forms If you acquired a replacement home with these proceeds, the basis is its cost decreased by any gain not recognized on the conversion under the rules explained in: Publication 547, in the case of a home that was destroyed, or Chapter 1 of Publication 544, in the case of a home that was condemned. 2012 tax return forms Example. 2012 tax return forms A fire destroyed your home that you owned and used for only 6 months. 2012 tax return forms The home had an adjusted basis of $80,000 and the insurance company paid you $130,000 for the loss. 2012 tax return forms Your gain is $50,000 ($130,000 − $80,000). 2012 tax return forms You bought a replacement home for $100,000. 2012 tax return forms The part of your gain that is taxable is $30,000 ($130,000 − $100,000), the unspent part of the payment from the insurance company. 2012 tax return forms The rest of the gain ($20,000) is not taxable, so that amount reduces your basis in the new home. 2012 tax return forms The basis of the new home is figured as follows. 2012 tax return forms Cost of replacement home $100,000 Minus: Gain not recognized 20,000 Basis of the replacement home $80,000 More information. 2012 tax return forms   For more information about basis, see Publication 551. 2012 tax return forms Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. 2012 tax return forms To figure your adjusted basis, you can use Worksheet 1, found toward the end of this publication. 2012 tax return forms Filled-in examples of that worksheet are included in Comprehensive Examples , later. 2012 tax return forms Recordkeeping. 2012 tax return forms You should keep records to prove your home's adjusted basis. 2012 tax return forms 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. 2012 tax return forms 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. 2012 tax return forms Keep records proving the basis of both homes as long as they are needed for tax purposes. 2012 tax return forms 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 exclude 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. 2012 tax return forms Increases to Basis These include the following. 2012 tax return forms Additions and other improvements that have a useful life of more than 1 year. 2012 tax return forms Special assessments for local improvements. 2012 tax return forms Amounts you spent after a casualty to restore damaged property. 2012 tax return forms Improvements. 2012 tax return forms   These add to the value of your home, prolong its useful life, or adapt it to new uses. 2012 tax return forms You add the cost of additions and other improvements to the basis of your property. 2012 tax return forms   The following chart lists some other examples of improvements. 2012 tax return forms Examples of Improvements That Increase Basis Additions Bedroom Bathroom Deck Garage Porch Patio Heating & Air Conditioning Heating system Central air conditioning Furnace Duct work Central humidifier Filtration system Lawn & Grounds Landscaping Driveway Walkway Fence  Retaining wall Sprinkler system Swimming pool  Miscellaneous Storm windows, doors New roof Central vacuum Wiring upgrades Satellite dish Security system  Plumbing Septic system Water heater Soft water system Filtration system  Interior Improvements Built-in appliances  Kitchen modernization  Flooring Wall-to-wall carpeting  Insulation Attic Walls Floors Pipes and duct work Improvements no longer part of home. 2012 tax return forms   Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. 2012 tax return forms Example. 2012 tax return forms You put wall-to-wall carpeting in your home 15 years ago. 2012 tax return forms Later, you replaced that carpeting with new wall-to-wall carpeting. 2012 tax return forms The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. 2012 tax return forms Repairs. 2012 tax return forms   These maintain your home in good condition but do not add to its value or prolong its life. 2012 tax return forms You do not add their cost to the basis of your property. 2012 tax return forms Examples. 2012 tax return forms Repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes are examples of repairs. 2012 tax return forms Exception. 2012 tax return forms   The entire job is considered an improvement if items that would otherwise be considered repairs are done as part of an extensive remodeling or restoration of your home. 2012 tax return forms For example, if you have a casualty and your home is damaged, increase your basis by the amount you spend on repairs that restore the property to its pre-casualty condition. 2012 tax return forms Decreases to Basis These include the following. 2012 tax return forms Discharge of qualified principal residence indebtedness that was excluded from income (but not below zero). 2012 tax return forms For details, see Publication 4681. 2012 tax return forms Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. 2012 tax return forms For details, see Publication 4681. 2012 tax return forms Gain you postponed from the sale of a previous home before May 7, 1997. 2012 tax return forms Deductible casualty losses. 2012 tax return forms Insurance payments you received or expect to receive for casualty losses. 2012 tax return forms Payments you received for granting an easement or right-of-way. 2012 tax return forms Depreciation allowed or allowable if you used your home for business or rental purposes. 2012 tax return forms Energy-related credits allowed for expenditures made on the residence. 2012 tax return forms (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. 2012 tax return forms ) Adoption credit you claimed for improvements added to the basis of your home. 2012 tax return forms Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. 2012 tax return forms 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. 2012 tax return forms 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. 2012 tax return forms District of Columbia first-time homebuyer credit allowed on the purchase of a principal residence in the District of Columbia. 2012 tax return forms General sales taxes 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. 2012 tax return forms Discharges of qualified principal residence indebtedness. 2012 tax return forms   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. 2012 tax return forms This exclusion applies to discharges made after 2006 and before 2014. 2012 tax return forms If you choose to exclude this income, you must reduce (but not below zero) the basis of your principal residence by the amount excluded from gross income. 2012 tax return forms   File Form 982 with your tax return. 2012 tax return forms See the form's instructions for detailed information. 2012 tax return forms    A decrease in basis due to a discharge of qualified principal residence indebtedness that is excluded from income occurs only if you retain ownership of the principal residence after a discharge. 2012 tax return forms In most cases, this would occur in a refinancing or a restructuring of the mortgage. 2012 tax return forms Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. 2012 tax return forms 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. 2012 tax return forms To qualify, you must meet the ownership and use tests described later. 2012 tax return forms 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. 2012 tax return forms This choice can be made (or revoked) at any time before the expiration of a 3-year period beginning on the due date of your return (not including extensions) for the year of the sale. 2012 tax return forms You can use Worksheet 2 (near the end of this publication) to figure the amount of your exclusion and your taxable gain, if any. 2012 tax return forms If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. 2012 tax return forms See Publication 505, Tax Withholding and Estimated Tax. 2012 tax return forms 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. 2012 tax return forms You meet the ownership test. 2012 tax return forms You meet the use test. 2012 tax return forms During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. 2012 tax return forms For details on gain allocated to periods of nonqualified use, see Nonqualified Use , later. 2012 tax return forms If you and another person owned the home jointly but file separate returns, each of you can exclude up to $250,000 of gain from the sale of your interest in the home if each of you meets the three conditions just listed. 2012 tax return forms 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 . 2012 tax return forms Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. 2012 tax return forms 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). 2012 tax return forms Exception. 2012 tax return forms   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. 2012 tax return forms However, the maximum amount you may be able to exclude will be reduced. 2012 tax return forms See Reduced Maximum Exclusion , later. 2012 tax return forms Example 1—home owned and occupied for at least 2 years. 2012 tax return forms Mya bought and moved into her main home in September 2011. 2012 tax return forms She sold the home at a gain in October 2013. 2012 tax return forms 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. 2012 tax return forms She meets the ownership and use tests. 2012 tax return forms Example 2—ownership test met but use test not met. 2012 tax return forms Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. 2012 tax return forms He later sold the home for a gain in June 2013. 2012 tax return forms He owned the home during the entire 5-year period ending on the date of sale. 2012 tax return forms He meets the ownership test but not the use test. 2012 tax return forms He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). 2012 tax return forms 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. 2012 tax return forms 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. 2012 tax return forms Example. 2012 tax return forms Naomi bought and moved into a house in July 2009. 2012 tax return forms She lived there for 13 months and then moved in with a friend. 2012 tax return forms She later moved back into her house and lived there for 12 months until she sold it in August 2013. 2012 tax return forms Naomi meets the ownership and use tests because, during the 5-year period ending on the date of sale, she owned the house for more than 2 years and lived in it for a total of 25 (13 + 12) months. 2012 tax return forms Temporary absence. 2012 tax return forms   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. 2012 tax return forms The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. 2012 tax return forms Example 1. 2012 tax return forms David Johnson, who is single, bought and moved into his home on February 1, 2011. 2012 tax return forms Each year during 2011 and 2012, David left his home for a 2-month summer vacation. 2012 tax return forms David sold the house on March 1, 2013. 2012 tax return forms Although the total time David lived in his home is less than 2 years (21 months), he meets the use requirement and may exclude gain. 2012 tax return forms 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. 2012 tax return forms Example 2. 2012 tax return forms Professor Paul Beard, who is single, bought and moved into a house in December 2010, went abroad for a 1-year sabbatical leave in January 2012, returned to the house in January 2013, and sold it at a gain in February 2013. 2012 tax return forms Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. 2012 tax return forms He cannot exclude any part of his gain because he did not use the residence for the required 2 years. 2012 tax return forms Ownership and use tests met at different times. 2012 tax return forms   You can meet the ownership and use tests during different 2-year periods. 2012 tax return forms However, you must meet both tests during the 5-year period ending on the date of the sale. 2012 tax return forms Example. 2012 tax return forms Beginning in 2002, Helen Jones lived in a rented apartment. 2012 tax return forms The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. 2012 tax return forms In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. 2012 tax return forms On July 12, 2013, while still living in her daughter's home, she sold her condominium. 2012 tax return forms 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. 2012 tax return forms She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). 2012 tax return forms She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). 2012 tax return forms 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. 2012 tax return forms Cooperative apartment. 2012 tax return forms   If you sold stock as a tenant-shareholder 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 entitled you to occupy as your main home for at least 2 years. 2012 tax return forms Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. 2012 tax return forms Exception for individuals with a disability. 2012 tax return forms   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. 2012 tax return forms 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. 2012 tax return forms   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. 2012 tax return forms Previous home destroyed or condemned. 2012 tax return forms   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. 2012 tax return forms This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home (see Involuntary Conversions in Publication 551). 2012 tax return forms 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. 2012 tax return forms Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. 2012 tax return forms   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 (defined later) as a member of the uniformed services or Foreign Service of the United States, or as an employee of the intelligence community. 2012 tax return forms 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 (defined later) or as an enrolled volunteer or volunteer leader of the Peace Corps. 2012 tax return forms 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. 2012 tax return forms   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. 2012 tax return forms Example. 2012 tax return forms John bought and moved into a home in 2005. 2012 tax return forms He lived in it as his main home for 2½ years. 2012 tax return forms For the next 6 years, he did not live in it because he was on qualified official extended duty with the Army. 2012 tax return forms He then sold the home at a gain in 2013. 2012 tax return forms To meet the use test, John chooses to suspend the 5-year test period for the 6 years he was on qualified official extended duty. 2012 tax return forms This means he can disregard those 6 years. 2012 tax return forms Therefore, John's 5-year test period consists of the 5 years before he went on qualified official extended duty. 2012 tax return forms He meets the ownership and use tests because he owned and lived in the home for 2½ years during this test period. 2012 tax return forms Period of suspension. 2012 tax return forms   The period of suspension cannot last more than 10 years. 2012 tax return forms Together, the 10-year suspension period and the 5-year test period can be as long as, but no more than, 15 years. 2012 tax return forms You cannot suspend the 5-year period for more than one property at a time. 2012 tax return forms You can revoke your choice to suspend the 5-year period at any time. 2012 tax return forms Example. 2012 tax return forms Mary bought a home on April 1, 1997. 2012 tax return forms She used it as her main home until August 31, 2000. 2012 tax return forms On September 1, 2000, she went on qualified official extended duty with the Navy. 2012 tax return forms She did not live in the house again before selling it on July 31, 2013. 2012 tax return forms Mary chooses to use the entire 10-year suspension period. 2012 tax return forms Therefore, the suspension period would extend back from July 31, 2013, to August 1, 2003, and the 5-year test period would extend back to August 1, 1998. 2012 tax return forms During that period, Mary owned the house all 5 years and lived in it as her main home from August 1, 1998, until August 31, 2000, a period of more than 24 months. 2012 tax return forms She meets the ownership and use tests because she owned and lived in the home for at least 2 years during this test period. 2012 tax return forms Uniformed services. 2012 tax return forms   The uniformed services are: The Armed Forces (the Army, Navy, Air Force, Marine Corps, and Coast Guard), The commissioned corps of the National Oceanic and Atmospheric Administration, and The commissioned corps of the Public Health Service. 2012 tax return forms Foreign Service member. 2012 tax return forms   For purposes of the choice to suspend the 5-year test period for ownership and use, you are a member of the Foreign Service if you are any of the following. 2012 tax return forms A Chief of mission. 2012 tax return forms An Ambassador at large. 2012 tax return forms A member of the Senior Foreign Service. 2012 tax return forms A Foreign Service officer. 2012 tax return forms Part of the Foreign Service personnel. 2012 tax return forms Employee of the intelligence community. 2012 tax return forms   For purposes of the choice to suspend the 5-year test period for ownership and use, you are an employee of the intelligence community if you are an employee of any of the following. 2012 tax return forms The Office of the Director of National Intelligence. 2012 tax return forms The Central Intelligence Agency. 2012 tax return forms The National Security Agency. 2012 tax return forms The Defense Intelligence Agency. 2012 tax return forms The National Geospatial-Intelligence Agency. 2012 tax return forms The National Reconnaissance Office and any other office within the Department of Defense for the collection of specialized national intelligence through reconnaissance programs. 2012 tax return forms Any of the intelligence elements of the Army, the Navy, the Air Force, the Marine Corps, the Federal Bureau of Investigation, the Department of Treasury, the Department of Energy, and the Coast Guard. 2012 tax return forms The Bureau of Intelligence and Research of the Department of State. 2012 tax return forms Any of the elements of the Department of Homeland Security concerned with the analyses of foreign intelligence information. 2012 tax return forms Qualified official extended duty. 2012 tax return forms   You are on qualified official extended duty if you are on extended duty while: Serving at a duty station at least 50 miles from your main home, or Living in Government quarters under Government orders. 2012 tax return forms   You are on extended duty when you are called or ordered to active duty for a period of more than 90 days or for an indefinite period. 2012 tax return forms 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. 2012 tax return forms (But see Special rules for joint returns, next. 2012 tax return forms ) Special rules for joint returns. 2012 tax return forms   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. 2012 tax return forms You are married and file a joint return for the year. 2012 tax return forms Either you or your spouse meets the ownership test. 2012 tax return forms Both you and your spouse meet the use test. 2012 tax return forms 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. 2012 tax return forms 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. 2012 tax return forms For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. 2012 tax return forms Example 1—one spouse sells a home. 2012 tax return forms Emily sells her home in June 2013 for a gain of $300,000. 2012 tax return forms She marries Jamie later in the year. 2012 tax return forms She meets the ownership and use tests, but Jamie does not. 2012 tax return forms Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. 2012 tax return forms The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. 2012 tax return forms Example 2—each spouse sells a home. 2012 tax return forms 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. 2012 tax return forms He meets the ownership and use tests on his home, but Emily does not. 2012 tax return forms Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. 2012 tax return forms However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. 2012 tax return forms Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. 2012 tax return forms 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. 2012 tax return forms Sale of main home by surviving spouse. 2012 tax return forms   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. 2012 tax return forms   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. 2012 tax return forms The sale or exchange took place after 2008. 2012 tax return forms The sale or exchange took place no more than 2 years after the date of death of your spouse. 2012 tax return forms You have not remarried. 2012 tax return forms You and your spouse met the use test at the time of your spouse's death. 2012 tax return forms You or your spouse met the ownership test at the time of your spouse's death. 2012 tax return forms Neither you nor your spouse excluded gain from the sale of another home during the last 2 years before the date of death. 2012 tax return forms The ownership and use tests were described earlier. 2012 tax return forms Example. 2012 tax return forms Harry owned and used a house as his main home since 2009. 2012 tax return forms Harry and Wilma married on July 1, 2013, and from that date they used Harry's house as their main home. 2012 tax return forms Harry died on August 15, 2013, and Wilma inherited the property. 2012 tax return forms Wilma sold the property on September 1, 2013, at which time she had not remarried. 2012 tax return forms 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. 2012 tax return forms Home transferred from spouse. 2012 tax return forms   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. 2012 tax return forms Use of home after divorce. 2012 tax return forms   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. 2012 tax return forms 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. 2012 tax return forms 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. 2012 tax return forms In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. 2012 tax return forms A change in place of employment. 2012 tax return forms Health. 2012 tax return forms Unforeseen circumstances. 2012 tax return forms Qualified individual. 2012 tax return forms   For purposes of the reduced maximum exclusion, a qualified individual is any of the following. 2012 tax return forms You. 2012 tax return forms Your spouse. 2012 tax return forms A co-owner of the home. 2012 tax return forms A person whose main home is the same as yours. 2012 tax return forms Primary reason for sale. 2012 tax return forms   One of the three reasons above will be considered to be the primary reason you sold your home if either (1) or (2) is true. 2012 tax return forms You qualify under a “safe harbor. 2012 tax return forms ” This is a specific set of facts and circumstances that, if applicable, qualifies you to claim a reduced maximum exclusion. 2012 tax return forms Safe harbors corresponding to the reasons listed above are described later. 2012 tax return forms A safe harbor does not apply, but you can establish, based on facts and circumstances, that the primary reason for the sale is a change in place of employment, health, or unforeseen circumstances. 2012 tax return forms  Factors that may be relevant in determining your primary reason for sale include whether: Your sale and the circumstances causing it were close in time, The circumstances causing your sale occurred during the time you owned and used the property as your main home, The circumstances causing your sale were not reasonably foreseeable when you began using the property as your main home, Your financial ability to maintain the property became materially impaired, The suitability of the property as your main home materially changed, and During the time you owned the property, you used it as your home. 2012 tax return forms Change in Place of Employment You may qualify for a reduced exclusion if the primary reason for the sale of your main home is a change in the location of employment of a qualified individual. 2012 tax return forms Employment. 2012 tax return forms   For this purpose, employment includes the start of work with a new employer or continuation of work with the same employer. 2012 tax return forms It also includes the start or continuation of self-employment. 2012 tax return forms Distance safe harbor. 2012 tax return forms   A change in place of employment is considered to be the reason you sold your home if: The change occurred during the period you owned and used the property as your main home, and The new place of employment is at least 50 miles farther from the home you sold than was the former place of employment (or, if there was no former place of employment, the distance between your new place of employment and the home sold is at least 50 miles). 2012 tax return forms Example. 2012 tax return forms Justin was unemployed and living in a townhouse in Florida he had owned and used as his main home since 2012. 2012 tax return forms He got a job in North Carolina and sold his townhouse in 2013. 2012 tax return forms Because the distance between Justin's new place of employment and the home he sold is at least 50 miles, the sale satisfies the conditions of the distance safe harbor. 2012 tax return forms Justin's sale of his home is considered to be because of a change in place of employment, and he is entitled to claim a reduced maximum exclusion of gain from the sale. 2012 tax return forms Health The sale of your main home is because of health if your primary reason for the sale is: To obtain, provide, or facilitate the diagnosis, cure, mitigation, or treatment of disease, illness, or injury of a qualified individual, or To obtain or provide medical or personal care for a qualified individual suffering from a disease, illness, or injury. 2012 tax return forms The sale of your home is not because of health if the sale merely benefits a qualified individual's general health or well-being. 2012 tax return forms For purposes of this reason, a qualified individual includes, in addition to the individuals listed earlier under Qualified individual , any of the following family members of these individuals. 2012 tax return forms Parent, grandparent, stepmother, stepfather. 2012 tax return forms Child, grandchild, stepchild, adopted child, eligible foster child. 2012 tax return forms Brother, sister, stepbrother, stepsister, half-brother, half-sister. 2012 tax return forms Mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, or daughter-in-law. 2012 tax return forms Uncle, aunt, nephew, niece, or cousin. 2012 tax return forms Example. 2012 tax return forms In 2012, Chase and Lauren, spouses, bought a house that they used as their main home. 2012 tax return forms Lauren's father has a chronic disease and is unable to care for himself. 2012 tax return forms In 2013, Chase and Lauren sold their home in order to move into Lauren's father's house to provide care for him. 2012 tax return forms Because the primary reason for the sale of their home was to provide care for Lauren's father, Chase and Lauren are entitled to a reduced maximum exclusion. 2012 tax return forms Doctor's recommendation safe harbor. 2012 tax return forms   Health is considered to be the reason you sold your home if, for one or more of the reasons listed at the beginning of this discussion, a doctor recommends a change of residence. 2012 tax return forms Unforeseen Circumstances 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 that home. 2012 tax return forms You are not considered to have an unforeseen circumstance if the primary reason you sold your home was that you preferred to get a different home or because your finances improved. 2012 tax return forms Specific event safe harbors. 2012 tax return forms   Unforeseen circumstances are considered to be the reason for selling your home if any of the following events occurred while you owned and used the property as your main home. 2012 tax return forms An involuntary conversion of your home, such as when your home is destroyed or condemned. 2012 tax return forms Natural or man-made disasters or acts of war or terrorism resulting in a casualty to your home, whether or not your loss is deductible. 2012 tax return forms In the case of qualified individuals (listed earlier under Qualified individual ): Death, Unemployment (if the individual is eligible for unemployment compensation), A change in employment or self-employment status that results in the individual's inability to pay reasonable basic living expenses (listed under Reasonable basic living expenses , later) for his or her household, Divorce or legal separation under a decree of divorce or separate maintenance, or Multiple births resulting from the same pregnancy. 2012 tax return forms An event the IRS determined to be an unforeseen circumstance in published guidance of general applicability. 2012 tax return forms For example, the IRS determined the September 11, 2001, terrorist attacks to be an unforeseen circumstance. 2012 tax return forms Reasonable basic living expenses. 2012 tax return forms   Reasonable basic living expenses for your household include the following. 2012 tax return forms Amounts spent for food. 2012 tax return forms Amounts spent for clothing. 2012 tax return forms Housing and related expenses. 2012 tax return forms Medical expenses. 2012 tax return forms Transportation expenses. 2012 tax return forms Tax payments. 2012 tax return forms Court-ordered payments. 2012 tax return forms Expenses reasonably necessary to produce income. 2012 tax return forms   Any of these amounts spent to maintain an affluent or luxurious standard of living are not reasonable basic living expenses. 2012 tax return forms Nonqualified Use Gain from the sale or exchange of the main home is not excludable from income if it is allocable to periods of nonqualified use. 2012 tax return forms Nonqualified use means any period after 2008 where neither you nor your spouse (or your former spouse) used the property as a main home, with certain exceptions (see next). 2012 tax return forms Exceptions. 2012 tax return forms   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. 2012 tax return forms Calculation. 2012 tax return forms   To figure the portion of the gain allocated to the period of nonqualified use, multiply the gain (net of any depreciation allowed or allowable on the property for periods after May 6, 1997) 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, later in this publication. 2012 tax return forms   For examples of this calculation, see Business Use or Rental of Home , next. 2012 tax return forms 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 if you meet the ownership and use tests. 2012 tax return forms Example 1. 2012 tax return forms On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. 2012 tax return forms 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. 2012 tax return forms The house was rented from June 1, 2009, to March 31, 2011. 2012 tax return forms Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. 2012 tax return forms 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. 2012 tax return forms 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. 2012 tax return forms Five-Year Period Used as Home Used as Rental 1/31/08 – 5/31/09 16 months   6/01/09 – 3/31/11   22 months 4/01/11 – 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. 2012 tax return forms Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain, as shown on Worksheet 2. 2012 tax return forms Example 2. 2012 tax return forms William owned and used a house as his main home from 2007 through 2010. 2012 tax return forms On January 1, 2011, he moved to another state. 2012 tax return forms He rented his house from that date until April 30, 2013, when he sold it. 2012 tax return forms 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. 2012 tax return forms Because it was rental property at the time of the sale, he must report the sale on Form 4797. 2012 tax return forms 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. 2012 tax return forms Because he met the ownership and use tests, he can exclude gain up to $250,000. 2012 tax return forms 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. 2012 tax return forms Depreciation after May 6, 1997. 2012 tax return forms   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. 2012 tax return forms 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. 2012 tax return forms Unrecaptured section 1250 gain. 2012 tax return forms   This is the part of any long-term capital gain from the sale of your home that is due to depreciation and cannot be excluded. 2012 tax return forms To figure the amount of unrecaptured section 1250 gain to be reported on Schedule D (Form 1040), you must also take into account certain gains or losses from the sale of property other than your home. 2012 tax return forms Use the Unrecaptured Section 1250 Gain Worksheet in the Schedule D instructions for this purpose. 2012 tax return forms Worksheet 2. 2012 tax return forms Taxable Gain on Sale of Home—Completed Example 1 for Amy Part 1. 2012 tax return forms Gain or (Loss) on Sale       1. 2012 tax return forms   Selling price of home 1. 2012 tax return forms     2. 2012 tax return forms   Selling expenses (including commissions, advertising and legal fees, and seller-paid loan charges) 2. 2012 tax return forms     3. 2012 tax return forms   Subtract line 2 from line 1. 2012 tax return forms This is the amount realized 3. 2012 tax return forms     4. 2012 tax return forms   Adjusted basis of home sold (from Worksheet 1, line 13) 4. 2012 tax return forms     5. 2012 tax return forms   Gain or (loss) on the sale. 2012 tax return forms Subtract line 4 from line 3. 2012 tax return forms If this is a loss, stop here 5. 2012 tax return forms 200,000   Part 2. 2012 tax return forms Exclusion and Taxable Gain       6. 2012 tax return forms   Enter any depreciation allowed or allowable on the property for periods after May 6, 1997. 2012 tax return forms If none, enter -0- 6. 2012 tax return forms 10,000   7. 2012 tax return forms   Subtract line 6 from line 5. 2012 tax return forms If the result is less than zero, enter -0- 7. 2012 tax return forms 190,000   8. 2012 tax return forms   Aggregate number of days of nonqualified use after 2008. 2012 tax return forms If none, enter -0-. 2012 tax return forms  If line 8 is equal to zero, skip to line 12 and enter the amount from line 7 on line 12 8. 2012 tax return forms 668   9. 2012 tax return forms   Number of days taxpayer owned the property 9. 2012 tax return forms 2,080   10. 2012 tax return forms   Divide the amount on line 8 by the amount on line 9. 2012 tax return forms Enter the result as a decimal (rounded to at least 3 places). 2012 tax return forms But do not enter an amount greater than 1. 2012 tax return forms 00 10. 2012 tax return forms 0. 2012 tax return forms 321   11. 2012 tax return forms   Gain allocated to nonqualified use. 2012 tax return forms (Line 7 multiplied by line 10) 11. 2012 tax return forms 60,990   12. 2012 tax return forms   Gain eligible for exclusion. 2012 tax return forms Subtract line 11 from line 7 12. 2012 tax return forms 129,010   13. 2012 tax return forms   If you qualify to exclude gain on the sale, enter your maximum exclusion (see Maximum Exclusion ). 2012 tax return forms  If you qualify for a reduced maximum exclusion, enter the amount from Worksheet 3, line 7. 2012 tax return forms If you do  not qualify to exclude gain, enter -0- 13. 2012 tax return forms 250,000   14. 2012 tax return forms   Exclusion. 2012 tax return forms Enter the smaller of line 12 or line 13 14. 2012 tax return forms 129,010   15. 2012 tax return forms   Taxable gain. 2012 tax return forms Subtract line 14 from line 5. 2012 tax return forms Report your taxable gain as described under Reporting the Sale . 2012 tax return forms If the amount on line 6 is more than zero, complete line 16 15. 2012 tax return forms 70,990   16. 2012 tax return forms   Enter the smaller of line 6 or line 15. 2012 tax return forms Enter this amount on line 12 of the Unrecaptured Section 1250 Gain  Worksheet in the instructions for Schedule D (Form 1040) 16. 2012 tax return forms 10,000 Property Used Partly for Business or Rental If you use property partly as a home and partly for business or to produce rental income, the treatment of any gain on the sale depends partly on whether the business or rental part of the property is part of your home or separate from it. 2012 tax return forms Part of Home Used for Business or Rental If the part of your property used for business or to produce rental income is within your home, such as a room used as a home office for a business, you do not need to allocate gain on the sale of the property between the business part of the property and the part used as a home. 2012 tax return forms In addition, you do not need to report the sale of the business or rental part on Form 4797. 2012 tax return forms This is true whether or not you were entitled to claim any depreciation. 2012 tax return forms However, you cannot exclude the part of any gain equal to any depreciation allowed or allowable after May 6, 1997. 2012 tax return forms See Depreciation after May 6, 1997, earlier. 2012 tax return forms Example 1. 2012 tax return forms Ray sold his main home in 2013 at a $30,000 gain. 2012 tax return forms He has no gains or losses from the sale of property other than the gain from the sale of his home. 2012 tax return forms He meets the ownership and use tests to exclude the gain from his income. 2012 tax return forms However, he used part of the home as a business office in 2012 and claimed $500 depreciation. 2012 tax return forms Because the business office was part of his home (not separate from it), he does not have to allocate the gain on the sale between the business part of the property and the part used as a home. 2012 tax return forms In addition, he does not have to report any part of the gain on Form 4797. 2012 tax return forms Because Ray was entitled to take a depreciation deduction, he must recognize $500 of the gain as unrecaptured section 1250 gain. 2012 tax return forms He reports his gain, exclusion, and the taxable gain of $500 on Form 8949 and Schedule D (Form 1040). 2012 tax return forms Example 2. 2012 tax return forms The facts are the same as in Example 1 except that Ray was not entitled to claim depreciation for the business use of his home. 2012 tax return forms Since Ray did not claim any depreciation, he can exclude the entire $30,000 gain. 2012 tax return forms Separate Part of Property Used for Business or Rental You may have used part of your property as your home and a separate part of it for business or to produce rental income. 2012 tax return forms Examples are: A working farm on which your house was located, A duplex in w