Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Capital Gain or Loss

Sale of Main Home


This section discusses reporting the sale of a taxpayer's main residence.

You will need to know if the home was the taxpayer's main home, if the taxpayer meets the ownership and use tests, and if the gain is more than the allowed exclusion.

Taxpayers must report the sale of a home when one of the following is true:

  • The taxpayer does not meet the ownership test
  • The taxpayer does not meet the use test
  • During the two-year period ending on the date of the sale, the taxpayer excluded the gain from the sale of another home
  • The taxpayer has a gain and does not qualify to exclude all of it
  • The taxpayer has a gain and chooses not to exclude it
  • The taxpayer received Form 1099-S

For additional information to help you make this determination, refer to the Selling Your Home Chapter in Publication 17 or Publication 523.


Special rules apply to foreclosures and cancellation of debt related to a taxpayer's principal residence. A foreclosure is treated as a sale of the home. Scope is very limited on foreclosures and cancellation of debt in the VITA/TCE programs. Under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers may exclude certain debt forgiven on their principal residence. These rules are covered in a specialty course on Link & Learn Taxes for volunteers with an Advanced Certification. This specialty course on cancellation of debt is optional. Check with your Site Coordinator to determine if you should be certified in this topic.

Be aware that the Mortgage Forgiveness Debt Relief provision is subject to change. See the current Publication 4491X for any updates.

Schedule D section for Long Term Capital Gains and Losses.