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Sale of Home

Pat111
Level 1

Hello,

I used the Pro Series Basic Program.

When you sell your home and pay off your mortgage balance in full with the proceeds of the sale, where does the mortgage balance paid off go on Sch D or 8949 form (s)?

Please respond.

Thank you

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8 Replies 8
athaureaux6
Level 7

I think you need to provide more information. Was it your main home? Did you take the main home exception? I think you need to be more specific about your question. 

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sjrcpa
Level 15

Nowhere.

When you bought the house, the mortgage was part of the purchase price.

Paying it off doesn't give you a deduction.


ex-AllStar
IRonMaN
Level 15

Without trying to sound nasty, if you are asking that question, you really need to do a little more homework on property sales before you finish that return.  You need to make sure you have the proper costs factored into the cost basis for the sale and you don't say if you are generating a gain or a loss on the sale.  If a gain, you really need to make sure a if the gain is indeed taxable.  If a loss, if it's personal property, it isn't deductible.

Armpit sniffer. Yup, checked out the help wanted ads and found the job. With my nose, how can I go wrong?
Pat111
Level 1

Thanks for replying to my question. My sister in law bought the house at a very low price back in 1980, but she refinanced it so many times she had over 252,000 to pay back the mortgage. The selling price was over 400000.00. It would like she had a large gain but the mortgage balance was paid off.

She gets the maximum exclusion (she is single) which is 250,000 and closing costs and selling expenses about 40000. 

The remaining amount cannot use the mortgage payoff as a deduction if she had no improvements done on the house?

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IRonMaN
Level 15

Original cost + improvements + closing costs = basis.

What she nets out because of loans has nothing to do with the calculation.

Armpit sniffer. Yup, checked out the help wanted ads and found the job. With my nose, how can I go wrong?
abctax55
Level 15

@Pat111 

DID your SIL report those loans as income when she got them?   Highly unlikely, so *why* would you think paying back that money is a deduction?

*********

This situation develops when folks treat their homes as ATM machines.  That chicken eventually comes home to roost.

 

 

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

If a post answers your question, click on *Accept as solution* for future searches
qbteachmt
Level 15

Let me try restating this for you:

"The selling price was over 400000.00. It would like she had a large gain but the mortgage balance was paid off."

Read it like this:

"The selling price was over $400,000 but I now see the amounts she took already, over all those years, was just using the home to prove she could secure the borrowing she did. That is why she had to pay it back from the Sale proceeds and didn't get all the sale money, and I see that isn't part of Profit or Cost or even Sale. It's part of Banking."

And are you using ProSeries to prepare the tax return?

*******************************
"Level Up" is a gaming function, not a real life function.
Just-Lisa-Now-
Level 15
Level 15

The mortgage that got paid off is generally part of your profit.


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