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Personal Residence Sales - Basis 

Signature of Seller Date

If you sold or exchanged your home after May 6, 1997, you may be allowed to exclude up to $250,000 of gain ($500,000, for certain married taxpayers filing a joint return) realized on the sale or exchange of your main home. The exclusion may be allowed each time you sell or exchange your main home, but generally no more frequently than once every two years. The rules that applied to sales before May 7, 1997, may still apply to youIf you sold your home under a contract that provides for part or all of the selling price to be paid in a later year, you made an installment sale.

To be eligible for an exclusion, your main home must have been owned by you and used as your main home for a period of at least two years out of the five years prior to its sale or exchange. You can meet the ownership and the use tests during different two year periods. However, both tests must be met during the five-year period ending on the date of the sale or exchange. If you and your spouse file a joint return for the year of the sale or exchange, you can exclude gain if either of you qualified for the exclusion.

If you did not meet the ownership and use tests, you may be allowed to exclude a portion of the gain realized on the sale or exchange of your home if:

1. You owned a home on August 5, 1997 and sold or exchanged it before August 5, 1999,
2. You sold or exchanged your home due to a change in health or place of employment, or
3. You sold or exchanged a home due to a change in health or place of employment, and during the 2-year period ending on the date of the sale or exchange you sold or exchanged another home at a gain and excluded all or part of that gain. When counting the number of sales or exchanges during a 2-year period, do not count sales or exchanges before May 7, 1997.

Report the sale or exchange only if you have a gain that is not excluded from your income. If you have a gain that is not excluded, you must report it on Schedule D, Form 1040. Form 2119 is obsolete for sales or exchanges after 1997.

You can claim the exclusion if, during the 5-year period ending on the date of the sale, you 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).

Exception. If you owned and used the property as your main home for less than 2 years, you may be able to claim a reduced exclusion. See Reduced Exclusion, later.

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. 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. 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. See Ownership and use tests met at different times, later.

Example 1 - met use test but not ownership test. From 1990 through August 1997 Amanda lived with her parents in a house that her parents owned. On September 2, 1997, she bought this house from her parents. She continued to live there until December 15, 1997, when she sold it at a gain. Although Amanda lived in the property as her main home for more than 2 years, she did not own it for the required 2 years. She cannot exclude any part of her gain on the sale, unless she sold the property due to a change in health or place of employment, as explained under Reduced Exclusion, later.

Example 2 - period of absence. Professor Paul Beard bought and moved into a house on January 4, 1995. He lived in it as his main home continuously until October 1, 1996, when he went abroad for a 1-year sabbatical leave. During part of the period of leave, the house was unoccupied, and during the rest of the period, he rented it out. On October 1, 1997, he sold the house. Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. However, even though he did not live in the house for the required 2-year period, he does qualify for a reduced exclusion because he owned the home on August 5, 1997, and sold it before August 5, 1999. See Reduced Exclusion, later.

Ownership and use tests met at different times. You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale.

Example. In 1990, Helen Jones was 50 years old and lived in a rented apartment. The apartment building was later changed to a condominium, and she bought her apartment on December 1, 1993. In 1995, Helen became ill and on April 14 of that year she moved to her daughter's home. On July 10, 1997, while still living in her daughter's home, she sold her apartment.

Helen can exclude gain on the sale of her apartment because she met the ownership and use tests. Her 5-year period is from July 11, 1992, to July 10, 1997, the date she sold the apartment. She owned her apartment from December 1, 1993, to July 10, 1997 (over 2 years). She lived in the apartment from July 11, 1992 (the beginning of the 5-year period), to April 14, 1995 (over 2 years).

Cooperative apartment. If you sold stock in a cooperative housing corporation, the ownership and use tests are that, during the 5-year period ending on the date of sale, you must have:

1. Owned the stock for at least 2 years, and
2. Used the house or apartment that the stock entitles you to occupy as your main home for at least 2 years.

Exception for individuals with a disability. There is an exception to the 2-out-of-5-year use test if you become physically or mentally unable to care for yourself at any time during the 5-year period.

You qualify for this exception to the use test if, during the 5-year period before the sale of your home:

1. You become physically or mentally unable to care for yourself, and
2. You owned and lived in your home as your main home for a total of at least 1 year.

Under this exception, you are considered to live in your home during any time that you live in a facility (including a nursing home) that is licensed by a state or political subdivision to care for persons in your condition.

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.

Gain postponed on sale of previous home. For the ownership and use tests, you may be able to add the time you owned and lived in a previous home to the time you lived in the home on which you wish to exclude gain. You can do this if you postponed all or part of the gain on the sale of the previous home because of buying the home on which you wish to exclude gain.

In addition, if buying the previous home enabled you to postpone all or part of the gain on the sale of a home you owned earlier, you can also include the time you owned and lived in that earlier home.

If you and your spouse file a joint return for the year of sale, you can exclude gain if either spouse meets the ownership and use tests. (But see Amount of Exclusion, earlier.)

Example 1 - one spouse meets use test. Emily sells her home in June 1997. She marries Jamie later in the year. She meets the ownership and use tests, but Jamie does not. Emily can exclude up to $250,000 of gain on a separate or joint return for 1997.

Example 2 - each spouse sells a home. The facts are the same as in Example 1 except that Jamie also sells a home. He meets the ownership and use tests on his home. Emily and Jamie can each exclude up to $250,000 of gain.

Death of spouse before sale. If your spouse died before the date of sale, you are considered to have owned and used the property as your main home during any period of time when your spouse owned and used it as a main home.

Home transferred from spouse. 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.

Use of home after divorce. You are considered to have used property as your main home during any period when:

1. You owned it, and
2. Your spouse or former spouse is allowed to use it under a divorce or separation instrument.

The cost of property is the amount you pay for it in cash, debt obligations, or other property.

Purchase. If you buy your home, your basis is its cost to you. This includes the purchase price and certain settlement or closing costs. 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.

Seller-paid points. 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 chart below.

If you must reduce your basis by seller-paid points and you use Worksheet 1 to figure your adjusted basis, enter the seller-paid points on line 2 of the worksheet (unless you used the seller-paid points to reduce the amount on line 1).

Settlement fees or closing costs. When buying your home, you may have to pay settlement fees or closing costs in addition to the contract price of the property. You can include in your basis the settlement fees and closing costs you pay for buying the home. You cannot include in your basis the fees and costs for getting a mortgage loan. A fee for buying the home is any fee you would have had to pay even if you paid cash for the home.

Settlement fees do not include amounts placed in escrow for the future payment of items such as taxes and insurance.

Some of the settlement fees or closing costs that you can include in the basis of your property are:

1. Abstract fees (abstract of title fees),
2. Charges for installing utility services,
3. Legal fees (including fees for the title search and preparing the sales contract and deed),
4. Recording fees,
5. Survey fees,
6. Transfer taxes,
7. Owner's title insurance, and
8. Any amounts the seller owes that you agree to pay, such as:
1. Certain real estate taxes (discussed in detail later),
2. Back interest,
3. Recording or mortgage fees,
4. Charges for improvements or repairs, and
5. Sales commissions.

Some settlement fees and closing costs not included in your basis are:

1. Fire insurance premiums,
2. Rent for occupancy of the house before closing,
3. Charges for utilities or other services related to occupancy of the house before closing,
4. Any fee or cost that you deducted as a moving expense (allowed for certain fees and costs before 1994),
5. Charges connected with getting a mortgage loan, such as:
1. Mortgage insurance premiums (including VA funding fees),
2. Loan assumption fees,
3. Cost of a credit report, and
4. Fee for an appraisal required by a lender, and
6. Fees for refinancing a mortgage.

Real estate taxes. Real estate taxes for the year you bought your home may affect your basis, as shown in the following chart.

Construction. If you contracted to have your house built on land you own, your basis is:

1. The cost of the land, plus
2. The amount it cost you to complete the house, including:
1. The cost of labor and materials,
2. Any amounts paid to a contractor,
3. Any architect's fees,
4. Building permit charges,
5. Utility meter and connection charges, and
6. Legal fees directly connected with building the house.

Your cost includes your down payment and any debt, such as a first or second mortgage or notes you gave the seller or builder. It also includes certain settlement or closing costs. You may have to reduce the basis by points the seller paid for you. For more information, see Seller-paid points and Settlement fees or closing costs, earlier.

Built by you. If you built all or part of your house yourself, its basis is the total amount it cost you to complete it. 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.

Temporary housing. 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 applies to temporary housing. 

Cooperative apartment. Your basis in the apartment is usually the cost of your stock in the co-op housing corporation, which may include your share of a mortgage on the apartment building.

You must use a basis other than cost, such as fair market value, if you got your home as a gift, from your spouse, as an inheritance, or in a trade. If you got your home in any of these ways, see the following discussion that applies to you. If you want to figure your adjusted basis using Worksheet 1, see Table 1 for help.

Fair market value. Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of the relevant facts. Sales of similar property, on or about the same date, may be helpful in figuring the fair market value of the property.

Home received as gift. Use the following chart to find the basis of a home you received as a gift.

Part of federal gift tax due to net increase in value. 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. The numerator (top part) of the fraction is the net increase in the value of the home, and the denominator (bottom part) is the fair market value of the home. The net increase in the value of the home is its fair market value minus the donor's adjusted basis.

Home received from spouse. You may have received your home from your spouse or from your former spouse incident to your divorce.

Transfers after July 18, 1984. If you received the home after July 18, 1984, you had no gain or loss on the transfer. Your basis in this home is generally the same as your spouse's (or former spouse's) adjusted basis just before you received it. This rule applies even if you received the home in exchange for cash, the release of marital rights, the assumption of liabilities, or other consideration.

If you owned a home jointly with your spouse and your spouse transferred his or her interest in the home to you, your basis in the half interest received from your spouse is generally the same as your spouse's adjusted basis just before the transfer. This also applies if your former spouse transferred his or her interest in the home to you incident to your divorce. Your basis in the half interest you already owned does not change. Your new basis in the home is the total of these two amounts.

Transfers before July 19, 1984. If you received your home before July 19, 1984, in exchange for your release of marital rights, your basis in the home is generally its fair market value at the time you received it.

Home received as inheritance. If you inherited your home, its basis is its fair market value on the date of the decedent's death or the later alternate valuation date if that date was used for federal estate tax purposes. If an estate tax return was filed, the value listed there for the property generally is your basis. 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.

Surviving spouse. If you are a surviving spouse and you owned your home jointly, your basis in the home will change. The new basis for the half interest that your spouse owned will be one-half of the fair market value on the date of death (or alternate valuation date). The basis in your half will remain one-half of the adjusted basis determined previously. Your new basis is the total of these two amounts.

Example. Your jointly owned home 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. 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).

Community property. 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. When either spouse dies, the fair market value of the community property generally becomes the basis of the entire property, including the part belonging to the surviving spouse. 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.

Home received in trade. If you acquired your home in a trade for other property, the basis of your home is generally the fair market value of the other property at the time of the trade. If you traded one home for another, you have made a sale and purchase. In that case, you may have realized a gain. See Trading homes, earlier, for an example of figuring the gain.

Adjusted basis is your basis increased or decreased by certain amounts.

To figure your adjusted basis, you can use Worksheet 1. A filled-in example of that worksheet is included in a comprehensive Illustrated Example later in this chapter. Table 1 explains how to use the worksheet in certain special situations.

Increases to basis. These include any:

1. Improvements that have a useful life of more than 1 year,
2. Additions,
3. Special assessments for local improvements, and
4. Amounts you spent after a casualty to restore damaged property.

 Decreases to basis. These include any:

1. Gain you postponed from the sale of a previous home before May 7, 1997,
2. Deductible casualty losses,
3. Insurance payments you received or expect to receive for casualty losses,
4. Payments you received for granting an easement or right-of-way,
5. Depreciation allowed or allowable if you used your home for business or rental purposes,
6. Residential energy credit (generally allowed from 1977 through 1987) claimed for the cost of energy improvements that you added to the basis of your home,
7. Adoption credit you claimed for improvements that you added to the basis of your home,
8. Nontaxable payments from an adoption assistance program of your employer that you used for improvements you added to the basis of your home,
9. First-time homebuyers credit (allowed to certain first-time buyers of a home in the District of Columbia), and
10. 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. An energy conservation measure is an installation or modification that is primarily designed either to reduce consumption of electricity or natural gas or to improve the management of energy demand for a home.

Improvements. These add to the value of your home, prolong its useful life, or adapt it to new uses. You add the cost of improvements to the basis of your property.

Examples. Putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a new fence, putting in new plumbing or wiring, putting on a new roof, or paving your unpaved driveway are improvements.

The chart below lists some other examples of improvements.

Examples of Improvements

 Improvements no longer part of home. Your home's adjusted basis does not include the cost of any improvements that are no longer part of the home.

Example. You put wall-to-wall carpeting in your home 15 years ago. Later, you replaced that carpeting with new wall-to-wall carpeting. The cost of the old carpeting you replaced is no longer part of your home's adjusted basis.

Repairs. These maintain your home in good condition but do not add to its value or prolong its life. You do not add their cost to the basis of your property.

Examples. Repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes are examples of repairs.

Exception. The entire job is considered an improvement, however, if items that would otherwise be considered repairs are done as part of an extensive remodeling or restoration of your home.

• 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 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 2119 that 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.

You may qualify to exclude from your income all or part of any gain from the sale of your main home. This means that, if you qualify, you will not have to pay tax on the gain up to the limit described under Maximum Amount of Exclusion, next. To qualify, you must meet the ownership and use tests described later.

You can exclude the entire gain on the sale of your main home up to:

You can claim an exclusion, but the maximum amount of gain you can exclude will be reduced, if any of the following are true.

1. You did not meet the ownership and use tests for a home you owned on August 5, 1997, and sold before August 5, 1999.
2. You did not meet the ownership and use tests for a home you sold due to a change in health or place of employment.
3. Your exclusion would have been disallowed because of the rule described in More Than One Home Sold During 2-Year Period, next, except that you sold the home due to a change in health or place of employment.

You cannot exclude gain on the sale of your home if, during the 2-year period ending on the date of the sale, you sold another home at a gain and excluded all or part of that gain. If you cannot exclude the gain, you must include it in your income.

However, if you sold the home due to a change in health or place of employment, you can still claim an exclusion. The maximum amount you can exclude is reduced. See Reduced Maximum Exclusion, earlier.

To claim the exclusion you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have:

1. Owned the home for at least 2 years (the ownership test), and
2. Lived in the home as your main home for at least 2 years (the use test).

Exception. If you owned and lived in the property as your main home for less than 2 years, you may still be able to claim an exclusion in some cases. The maximum amount you can claim will be reduced. See Reduced Maximum Exclusion, earlier.

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. 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. 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. See Ownership and use tests met at different times, later.

Example 1 - met use test but not ownership test. From 1990 through August 1998 Amanda lived with her parents in a house that her parents owned. On September 2, 1998, she bought this house from her parents. She continued to live there until December 15, 1999, when she sold it at a gain. Although Amanda lived in the property as her main home for more than 2 years, she did not own it for the required 2 years. She cannot exclude any part of her gain on the sale, unless she sold the property due to a change in health or place of employment, as explained under Reduced Maximum Exclusion, earlier.

Example 2 - period of absence. Professor Paul Beard, who is single, bought and moved into a house on August 30, 1996. He lived in it as his main home continuously until January 5, 1998, when he went abroad for a 1-year sabbatical leave. During part of the period of leave, the house was unoccupied, and during the rest of the period, he rented it out. On January 5, 1999, he sold the house. Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. However, even though he did not live in the house for the required 2-year period, he does qualify for an exclusion because he owned the home on August 5, 1997, and sold it before August 5, 1999. See Reduced Maximum Exclusion, earlier. The maximum amount of gain he can exclude will be less than $250,000. In addition, he cannot exclude the part of the gain equal to the depreciation he claimed. See Depreciation for business use after May 6, 1997, later.

Ownership and use tests met at different times. You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale.

 Example. In 1990, Helen Jones lived in a rented apartment. The apartment building was later changed to a condominium and she bought her apartment on December 1, 1996. In 1997, Helen became ill and on April 14 of that year she moved to her daughter's home. On July 10, 1999, while still living in her daughter's home, she sold her apartment.

Helen can exclude gain on the sale of her apartment because she met the ownership and use tests. Her 5-year period is from July 11, 1994, to July 10, 1999, the date she sold the apartment. She owned her apartment from December 1, 1996, to July 10, 1999 (over 2 years). She lived in the apartment from July 11, 1994 (the beginning of the 5-year period), to April 14, 1997 (over 2 years).

Cooperative apartment. If you sold stock in a cooperative housing corporation, the ownership and use tests are that, during the 5-year period ending on the date of sale, you must have:

1. Owned the stock for at least 2 years, and
2. Lived in the house or apartment that the stock entitles you to occupy as your main home for at least 2 years.

 Exception for individuals with a disability. There is an exception to the use test if, during the 5-year period before the sale of your home:

1. You become physically or mentally unable to care for yourself, and
2. You owned and lived in your home as your main home for a total of at least 1 year.

Under this exception, you are considered to live in your home during any time that you own the home and live in a facility (including a nursing home) that is licensed by a state or political subdivision to care for persons in your condition.

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.

 Gain postponed on sale of previous home. For the ownership and use tests, you may be able to add the time you owned and lived in a previous home to the time you lived in the home on which you wish to exclude gain. You can do this if you postponed all or part of the gain on the sale of the previous home because of buying the home on which you wish to exclude gain.

In addition, if buying the previous home enabled you to postpone all or part of the gain on the sale of a home you owned earlier, you can also include the time you owned and lived in that earlier home.

Example 1 - one spouse meets use test. Emily sells her home in June 1999. She marries Jamie later in the year. She meets the ownership and use tests, but Jamie does not. She can exclude up to $250,000 of gain on a separate or joint return for 1999.

 Example 2 - each spouse sells a home. The facts are the same as in Example 1 except that Jamie also sells a home. He meets the ownership and use tests on his home. Emily and Jamie can each exclude up to $250,000 of gain.

 Death of spouse before sale. If your spouse died 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.

 Home transferred from spouse. 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.

 Use of home after divorce. You are considered to have used property as your main home during any period when:

 Depreciation for business use after May 6, 1997. 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. If you can show by adequate records or other evidence that the depreciation deduction allowed was less than the amount allowable, the amount you cannot exclude is the smaller figure.

 Example. Micah sold his main home in 1999 at a $30,000 gain. He meets the use and ownership tests to exclude the gain from his income. However, he used part of the home for business in December 1998 and claimed $500 depreciation. He can exclude $29,500 ($30,000 - $500) of his gain. He has a taxable gain of $500.

 Property used partly as your home and partly for business or rental during the year of sale. In the year of sale you may have used part of your property as your home and part of it for business or to produce income. Examples are:

• A working farm on which your house is located,
• An apartment building in which you live in one unit and rent out the others,
• A store building with an upstairs apartment in which you live, or
• A home with a room used for business or to produce income.

 Expatriates. You cannot claim the exclusion if section 877(a)(1) of the Internal Revenue Code applies to you. That section applies to U.S. citizens who have renounced their citizenship (and long-term residents who have ended their residency) if one of their principal purposes was to avoid U.S. taxes.

 Home destroyed or condemned. If your home was destroyed or condemned, any gain (for example, because of insurance proceeds you received) qualifies for the exclusion.

Sale of remainder interest. Subject to the other rules in this chapter, you can choose to exclude gain from the sale of a remainder interest in your home. If you make this choice, you cannot choose to exclude gain from your sale of any other interest in the home that you sell separately.

• You have a gain and do not qualify to exclude all of it,
• You have a gain and choose not to exclude it, or

If you have any taxable gain on the sale of your main home, report the entire gain realized on Schedule D (Form 1040), Capital Gains and Losses, with your return. Report it on line 1 or line 8 of Schedule D, depending on how long you owned the home. If you qualify for an exclusion, show it on the line directly below the line on which you report the gain. Write "Section 121 exclusion" in column (a) of that line and show the amount of the exclusion in column (f) as a loss (in parentheses).

Installment sale. Some sales are made under arrangements that provide for part or all of the selling price to be paid in a later year. These sales are called installment sales. If you finance the buyer's purchase of your home yourself, instead of having the buyer get a loan or mortgage from a bank, you may have an installment sale. If the sale qualifies, you can report the part of the gain you cannot exclude on the installment basis.

Use Form 6252, Installment Sale Income, to report the sale.

 Seller-financed mortgage. If you sell your home and hold a note, mortgage, or other financial agreement, the payments you receive generally consist of both interest and principal. You must report the interest you receive as part of each payment separately as interest income. If the buyer of your home uses the property as a main or second home, you must also report the name, address, and social security number (SSN) of the buyer on line 1 of either Schedule B (Form 1040) or Schedule 1 (Form 1040A). The buyer must give you his or her SSN and you must give the buyer your SSN. Failure to meet these requirements may result in a $50 penalty for each failure. If you or the buyer does not have and is not eligible to get an SSN, see the next discussion.

 Individual taxpayer identification number (ITIN). If either you or the buyer of your home is a nonresident or resident alien who does not have and is not eligible to get an SSN, the IRS will issue you (or the buyer) an ITIN. To apply for an ITIN, file Form W-7 with the IRS.

If you have to include the buyer's SSN on your return and the buyer does not have and cannot get an SSN, enter the buyer's ITIN. If you have to give an SSN to the buyer and you do not have and cannot get one, give the buyer your ITIN.

CERTIFICATION FOR NO INFORMATION REPORTING Return to top

ON THE SALE OR EXCHANGE OF A PRINCIPAL RESIDENCE

This form may be completed by the seller of a principal residence. This information is necessary to determine whether the sale or exchange should be reported to the seller, and to the Internal Revenue Service on Form 1099-S, Proceeds From Real Estate Transactions. If the seller properly completes Parts I and III, and makes a "yes" response to assurances (1) through (4) in Part II, no information reporting to the seller or to the Service will be required for that seller. The term "seller" includes each owner of the residence that is sold or exchanged. Thus, if a residence has more than one owner, a real estate reporting person must either obtain a certification from each owner (whether married or not) or file an information return and furnish a payee statement for any owner that does not make the certification.

Part I. Seller Information

1. Name _____________________________________________________________

2. Address or legal description (including city, state, and ZIP code) of residence being sold or exchanged

_________________________________________________________________

_________________________________________________________________

3. Taxpayer Identification Number (TIN) ______________________________

Part II. Seller Assurances

Check "yes" or "no" for assurances (1) through (4).

(1) I owned and used the residence as my principal residence for periods aggregating 2 years or more during the 5- year period ending on the date of the sale or exchange of the residence.  Yes No

(2) I have not sold or exchanged another principal residence during the 2-year period ending on the date of the sale or exchange of the residence (not taking into account any sale or exchange before May 7, 1997).  Yes No

(3) No portion of the residence has been used for business or rental purposes by me (or my spouse if I am married) after May 6, 1997.  Yes No

(4) At least one of the following three statements applies: Yes No

The sale or exchange is of the entire residence for $250,000 or less. OR...

I am married, the sale or exchange is of the entire residence for $500,000 or less, and the gain on the sale or exchange of the entire residence is $250,000 or less.  OR...

I am married, the sale or exchange is of the entire residence for $500,000 or less, and (a) I intend to file a joint return for the year of the sale or exchange, (b) my spouse also used the residence as his or her principal residence for periods aggregating 2 years or more during the 5-year period ending on the date of the sale or exchange of the residence, and (c) my spouse also has not sold or exchanged another principal residence during the 2-year period ending on the date of the sale or exchange of the residence (not taking into account any sale or exchange before May 7, 1997).

Part III. Seller Certification

Under penalties of perjury, I certify that all the above information is true as of the end of the day of the sale or exchange.

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