Tax Question - How to Report Real Estate Sale?

Question

Just received a notice from the IRS stating "your 2014 tax return doesn't match the information we have on file." There were several small items, but the big one was the sale of my primary residence. Since I owned the home for 10 years, as I understood it, I didn't have to pay taxes on the proceeds so I didn't file any paperwork. (Hey, it was my first house. I didn't know!!) ;)

I plan to file a 1099-S "Proceeds from Real Estate Transactions". So my question is since the form asks for "Gross Proceeds" (i.e. final sales price), do I need to, and if so where, show the net proceeds (gross proceeds minus the existing mortgage). The net amount was less than $250K.

Would it be best to refile or just submit the forms that were missing?

Many thanks in advance!

Natalie Kolodij · Answer

Did you receive a 1099-S? It would have been filed during the sale, and you sent a copy.

That's what I'm guessing the issue is- they reported a 1099-S and you didn't report the corresponding income on your tax return.

I'd give the IRS a call and see what they want. You can likely fax them purchase/sale documents showing the exclusion and hopefully not have to amend your 2014 return.

Mark J. · Answer

Thank you Natalie. That's just what I was thinking. I used a CPA for the first time this year, and asked him about it. He wants to refile (for a full tax preparation fee of course). I'll try to resolve it first and refile as last resort.

Very much appreciate your response.

Tax Question - How to Report Real Estate Sale?

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