A taxpayer typically owns only one primary residence or main home at a time, and if they sell that home they may be able to exclude a portion of the capital gain from tax. In TaxSlayer Pro, the exclusion is calculated on the Sale of Main Home Worksheet. Click here for more information about completing the worksheet in TaxSlayer Pro.
If they own and reside in more than one residence, they will need to determine which is their main home based on the facts and circumstances. IRS Publication 523, Selling Your Home, provides guidance in determining which home is the main home should there be a question.
A return can include the sale of two main homes, however, when the taxpayer and spouse married during the tax year and both sold their respective primary residences in the tax year. TaxSlayer Pro only allows one Sale of Main Home Worksheet to be completed in a tax return, so the question is how to include the sale of two main homes in the jointly filed tax return? Follow these steps:
1. Prepare the Sale of Main Home Worksheet for the taxpayer.
2. Under the View Results menu, select the Sale of Main Home Worksheet, and print it. Save the PDF copy for reference purposes.
3. Returning to the "Other" menu in the Capital Gain/Loss Transactions menu, select the Sale of Main Home Worksheet, then remove it.
4. Select the Sale of Main Home Worksheet and prepare it for the spouse. This worksheet will remain in the return, and the exclusion, if any, will flow to Form 8949.
5. In the Capital Gain/Loss Transactions menu, click New and enter the information for the taxpayer's sale of main home as reported on the first Sale of Main Home Worksheet prepared and printed in steps 1 and 2 above:
- Description - Enter "MAIN HOME TAXPAYER".
- Form 1099-B Type - Choose "Form 1099-B Not Received".
- Date Acquired - Enter the date acquired.
- Date Sold - Enter the date sold.
- Sales Price - Enter the sales price (Worksheet 2 line 3).
- Cost - Enter the cost basis (Worksheet 1 line 13).
When finished entering the above info, click Ok.
6. In the Schedule D menu, select Adjustment Code and check the box for code H "Exclude Some/All of the Gain from the Sale of Your Main Home", then click Ok.
7. Select Adjustment to Gain/Loss and enter as a negative number the exclusion on the taxpayer's Worksheet 2 line 14.
8. If there is an amount on the taxpayer's Worksheet 2 line 16, that amount will need to be entered as an adjustment on the Unrecaptured Section 1250 Gain Worksheet here:
- Schedule D Other Menu
- Adjust 28% Rate/1250 Worksheets
- Sale of 1250 Property Not Reported on 4797 - Enter the amount on the taxpayer's Worksheet 2 line 16.
Note: This is a guide on entering the sale of two main homes in the TaxSlayer Pro program. This is not intended as tax advice.
Additional Information:
IRS: Publication 523 - Selling Your Home
IRS: Instructions for Form 8949
Desktop: Excluding the Sale of Main Home
Desktop: Form 8949 - Sales and Dispositions of Capital Assets