Do You Have to File Income Taxes If You're Retired & Sell Some Property?
- For 2010 returns, taxpayers over 65 are allowed a slightly higher filing limit than other taxpayers. Seniors are not required to file a return unless their gross income is at least $10,750 if single, $13,450 if head of household, $20,900 if married filing jointly, or $16,150 if qualifying widow or widower. The income filing limit for married filing separate filers is $3,650 and is the same for taxpayers of any age. If you do not meet the filing limit for your filing status as result of the sale of your home, then you are not required to file a return.
- It is generally a good idea to choose the simplest form for your situation. Since the sale of property often requires further itemizations, it is best to use form 1040. It is especially good to use form 1040 if the basis of your sale was an investment property.
- If you realized a gain from the sale of your home, you will usually receive form 1099-S in the mail. Box 2 of the form lists your gross proceeds from the sale of the home. However, form 1099-S does not take into account the value of any services other than cash or any expenditure such as commissions or advertising fees. So to figure your gain from the sale, you will first need to figure the amount realized -- the selling price minus the selling expenses. Then, figure your adjusted basis using worksheet 1 in publication 523. Your selling price minus any expenses equals your amount realized. Your amount realized minus your adjusted basis equals your total gain or loss from the sale of the property. Report the gain on your schedule D and form 1040.
- You can exclude up to $250,000 of the gain from the sale of property if the property is your main home and meets certain criteria. During the five-year period that ends at the date of sale, you must have lived in the home for at least two years and owned the home as your main home for at least two years. In addition, during the two-year period leading up to the date of sale, you must not have claimed another home as your main home.
