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Reporting Gain or Loss on Your Home Sale: Home Sale Taxes (2025 IRS Guide)

This guide covers “Reporting Gain or Loss on Your Home Sale” within home sale taxes. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 523 (2025), Selling Your Home, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Context for these rules

This section tells you how to report taxable gain, take deductions relating to your home sale, and report income other than the gain that you may have received from your home sale.

This section also covers special circumstances that apply to some home sellers.

Reporting Gain or Loss on Your Home Sale

Determine whether you need to report the gain from your home.

You need to report the gain if ANY of the following is true.

  • You have taxable gain on your home sale (or on the residential portion of your property if you made separate calculations for home and business) and don’t qualify to exclude all of the gain.

  • You received a Form 1099-S. If so, you must report the sale on Form 8949 even if you have no taxable gain to report. See Instructions for Form 8949 and Instructions for Schedule D (Form 1040) for more details.

  • You wish to report your gain as a taxable gain even though some or all of it is eligible for exclusion. You may wish to do this if, for example, you plan to sell another main home within the next 2 years and are likely to receive a larger gain from the sale of that property. If you later choose to report, rather than exclude, your taxable gain, you can undo that choice by filing an amended return within 3 years of the due date of your return for the year of the sale, excluding extensions.

If NONE of the three bullets above is true, you don’t need to report your home sale on your tax return. If you didn’t make separate home and business calculations on your property, skip to Reporting Deductions Related to Your Home Sale, later.

If ANY of the three bullets above is true, skip to Determine whether your home sale is an installment sale, later.

If you made separate gain/loss calculations for business and residence portions of your property,

you may have to use Form 4797 to report the sale of the business or rental part. See Property Used Partly for Business or Rental, earlier.

Determine any depreciation amounts you may need to recapture.

The exclusion of gain doesn't apply to any gain from depreciation adjustments attributable to periods after May 6, 1997. Such gain is not accounted for in determining the amount of gain allocated to business or rental use. You must adjust basis for depreciation deducted in earlier years. If you didn't deduct any depreciation, decrease your basis by the amount you could have deducted. For information on depreciation deductions associated with business or rental use of a principal residence, see Pub. 946.

For depreciation deducted during periods of rental or business use, the adjustment to basis will affect net gain or loss. Upon the sale of real property held more than a year, additional depreciation in excess of the straight-line method are taxed as ordinary income if the property was held more than a year. Net gain in excess of the maximum excludable (for your filing status) is taxed at the applicable capital gains rate. See the Instructions for Form 4797 and for Schedule D (Form 1040) to figure the total amount of depreciation deductions for any period when the property was used for business or rental. See Additional Depreciation in Pub. 544 for guidance on the potential recapture of additional depreciation deductions.

Determine whether your home sale is an installment sale.

If you finance the buyer’s purchase of your home (you hold a note, mortgage, or other financial agreement), you probably have an installment sale. You may be able to report any nonexcludable gain on an installment basis. However, generally where a seller of property reports profit on the installment method, any recapturable depreciation gain recognized must all be reported for the year of the installment sale. Use Form 6252, Installment Sale Income, to report the sale.

For more information, see Pub. 537, Installment Sales.

Report any interest you receive from the buyer.

If the buyer is making payments to you over time (as when you provide seller financing), then you must generally report part of each payment as interest on your tax return. Report the interest portion of the payment as ordinary income on Form 1040 or 1040-SR, line 2b, or Schedule NEC (Form 1040-NR) if a nonresident alien. If the buyer is using the property as a first or second home, also report the interest on Schedule B (Form 1040), Interest and Ordinary Dividends, and provide the buyer’s name, address, and social security number (SSN). If you don’t show the buyer’s name, address, and SSN you may have to pay a $50 penalty.

If you’re a nonresident or resident alien who doesn’t have and isn’t eligible to get a SSN,

you may be issued an individual taxpayer identification number (ITIN). If you don’t have an ITIN, apply for one by filing Form W-7, Application for IRS Individual Taxpayer Identification Number. If needed, a nonresident or resident alien buyer can apply for an ITIN as well.

Complete Form 8949, Sales and Other Dispositions of Capital Assets.

Use Form 8949 to report gain from the sale or disposition of the personal-use portion of your home if you can’t exclude the gain. If you received Form 1099-S, report the transaction on Form 8949. See the Instructions for Form 8949.

Reporting recognized gain.

If you have gain that can’t be excluded, you must generally report it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040), Capital Gains and Losses. Report the sale on Part I or Part II of Form 8949 as a short-term or long-term transaction, depending on how long you owned the home. In addition, you may be able to temporarily defer capital gains invested in a Qualified Opportunity Fund (QOF). You may also be able to permanently exclude capital gains from the sale or exchange of an investment in a QOF if the investment is held for at least 10 years. For more information, see the Instructions for Form 8949.

Complete Schedule D (Form 1040), Capital Gains and Losses.

Using the information on Form 8949, report on Schedule D (Form 1040) the gain or loss on your home as a capital gain or loss. Follow the instructions for Schedule D when completing the form.

If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. See Pub. 505, Tax Withholding and Estimated Tax.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.

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