Eligibility
Applies to sales of principal residences for $250,000 or less ($500,000 for married couples) where the seller provides written assurance that the gain is fully excludable from gross income.
Frequently Asked Questions
Who is eligible for the Principal Residence Sale Reporting Exclusion?
Applies to sales of principal residences for $250,000 or less ($500,000 for married couples) where the seller provides written assurance that the gain is fully excludable from gross income.
How does the Principal Residence Sale Reporting Exclusion work?
Taxpayers can prevent the reporting of a home sale to the IRS by providing written assurance that the full gain is excludable under Section 121.
What law authorizes the Principal Residence Sale Reporting Exclusion?
The Principal Residence Sale Reporting Exclusion is authorized under IRC §6045(e)(5) of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §6045
Source: Internal Revenue Code, Title 26, United States Code
§ 6045. Returns of brokers(a) General ruleEvery person doing business as a broker shall, when required by the Secretary, make a return, in accordance with such regulations as the Secretary may prescribe, showing the name and address of each customer, with such details regarding gross proceeds and such other information as the Secretary may by forms or regulations require with respect to such business.
(b) Statements to be furnished to customersEvery person required to make a return under subsection (a) shall furnish to each customer whose name is required to be set forth in such return a written statement showing—(1) the name, address, and phone number of the information contact of the person required to make such return, and
(2) the information required to be shown on such return with respect to such customer.
The written statement required under the preceding sentence shall be furnished to the customer on or before February 15 of the year following the calendar year for which the return under subsection (a) was required to be made. In the case of a consolidated reporting statement (as defined in regulations) with respect to any customer, any statement which would otherwise be required to be furnished on or before January 31 of a calendar year with respect to any item reportable to the taxpayer shall instead be required to be furnished on or before February 15 of such calendar year if furnished with such consolidated reporting statement.
(c) DefinitionsFor purposes of this section—(1) BrokerThe term “broker” includes—(A) a dealer,
(B) a barter exchange,
(C) any person who (for consideration) regularly acts as a middleman with respect to property or services, and
(D) any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.
A person shall not be treated as a broker with respect to activities consisting of managing a farm on behalf of another person.
(2) CustomerThe term “customer” means any person for whom the broker has transacted any business.
(3) Barter exchangeThe term “barter exchange” means any organization of members providing property or services who jointly contract to trade or barter such property or services.
(4) PersonThe term “person” includes any governmental unit and any agency or instrumentality thereof.
(d) Statements required in case of certain substitute paymentsIf any broker—(1) transfers securities of a customer for use in a short sale or similar transaction, and
(2) receives (on behalf of the customer) a payment in lieu of—(A) a dividend,
(B) tax-exempt interest, or
(C) such other items as the Secretary may prescribe by regulations,
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