My brother sold his qualifying personal residence in 2024 for like $1.4 million. He is married and the gain was less than $500K, so there was no tax on sales proceeds. The H & R Block software does not put the $1.4 million sales proceeds anywhere on his tax return. How can this be…isn’t there any matching of Gross proceeds originating from Form 1099-S?
I would correct that to say that his full gain is eligible to be exempted from tax.
Because he got a 1099-S, the sale does need to be reported on his tax return. He needs to check his Form 8949, which is where the gain (not the proceeds) should be reported. From IRS Pub 523 2024 Publication 523
Then, the instructions for Form 8949 2024 Instructions for Form 8949 refer you to the Schedule D instructions:
Those Schedule D instructions 2024 Instructions for Schedule D finally tell you how to report the gain and show it’s excluded:
So he needs to check his Form 8949 and see if the gain from his home is reported, with a negative offset to zero out his taxable gain. If that’s not reported, then he needs to figure out how to make the software do that. I don’t use H&R Block software, so I can’t give any tips on that. He may need to call H&R Block customer support.
AJ
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Thanks AJ. I mimicked a home sale where the full gain is eligible to be exempted from tax(as you say) on my Tax Act software. I think they explained it very well…
Sale of Main Home - Summary
There is no taxable gain on the sale of your main home. The sale of your main home only needs to be reported on your return if you have a taxable gain or if you received a Form 1099-S for the transaction. If you received a Form 1099-S mark the box and the sale of your main home will be reported on Form 8949. If the sale of your main home is NOT required to be reported on your tax return, but you still want to report the transaction, check the box below.
You have a gain of $175,000 which qualifies to be excluded from income. Therefore if this transaction is reported on Form 8949 you will see this amount in column g as an adjustment amount along with code H in column f. The selling expenses will also be included in the adjustment amount in column g along with code E in column f. Your net gain/loss will be reported as $0 on Form 8949 for this transaction.
Check here if you received Form 1099-S.
@aj485 Normally the “closing agent” issues the 1099-S, but when you do a private sale (let’s say I write a check and hand it to the owner of the property, and then we go to the records office to record the sale and pay the fee), who issues the 1099-S form?
Maybe nobody, or maybe the owner who sold the property. First, there would have to be a determination of whether a 1099-S is required to be filed. You can find that in the “Reportable Real Estate” section of the Form 1099-S instructions Instructions for Form 1099-S (Rev. January 2022). There are several different reasons that the transfer of a property can be exempted from having to issue a 1099-S.
Assuming that the transfer requires a 1099-S (likely in the case that you described), then there is an entire priority hierarchy of who is responsible for issuing the 1099-S in the “Who Must File” section of those instructions. That hierarchy includes the closing agents, any attorneys involved, any mortgage lenders involved, any brokers involved and the owner who sold the property.
In the case you described, with nobody else involved in the sale other than the seller and the buyer, the seller would be responsible for issuing the 1099-S.
If anyone else had been involved - a title company, an attorney, a broker, a mortgage lender, etc. - those professionals would have had a priority responsibility to file the 1099-S before the responsibility fell to the selling owner.
AJ
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