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Reporting sale of residence

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Hal Weiland

Guest
I lived in my house in Seattle for 25 years before selling it in May. Ten months before selling the house, I married and my wife moved into the house with me. I didn't change the deed to include her and she did not make any mortgage payments. When I sold the house the escrow company had my wife sign all the paperwork with me. They said it was just a precaution because WA is a community property state. Now the escrow company wants each of us (wife and I) to fill out "IRS Revenue Procedure 98-20" forms. The problem is that my wife cannot assure that she lived in the house for two years and therefore might be stuck with tax on the house sale. MY QUESTION: Does she really have to fill out the form since the house was not in her name?

Thanks,
Hal
 


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loku

Guest
Sale of residence - new spouse

I believe you will be able to exclude the gain.

The general rule is that 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.

The following IRS illustration is also on point. It applies to any title your wife may have under state law: Home transferred from spouse. If your home was transferred to you by your spouse, you are considered to have owned it during any period of time when your spouse owned it.

However, I would like to check out the form. What is the name of the Rev Proc 98-20 form?

 
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Hal Weiland

Guest
Thanks a million for your advice.

The name of the IRS Revenue Procedure 98-20 form is: "CERTIFICATION FOR NO 1099-S REPORTING ON THE SALE OR EXCHANGE OF A PRINCIPAL RESIDENCE"

Hal
 
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loku

Guest
Form 1099-S

Here is an exerpt from the current instructions to Form 1099s:
Husband and wife. If the transferors were husband and wife at the time of closing, who held the property as joint tenants, tenants by the entirety, tenants in common, or as community property, treat them as a single transferor. Only one Form 1099-S showing either of them as the transferor is required.

According to that, only one 1099-S is required to be filed, and it can show you as the transferor.

I would suggest you download the Instructions to Form 1099-S. There are other options for you in the Instructions. Here is the link: http://ftp.fedworld.gov/pub/irs-pdf/i1099s00.pdf.
 
H

Hal Weiland

Guest
Reporting Sale of Residence

Thank you very much Ioku!

Hal
 

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