Home sale
Tax documents needed after selling a house
A home sale lands on the return for the year the sale closed, so a house sold in 2026 goes on the 2026 return filed in 2027. The preparer needs two sets of numbers: what the sale produced and what the home cost over time. Most of the work is in the second set, which the client almost never has in one place.
Who sends itSent by the preparer to a client as soon as they mention a sale, or when a Form 1099-S shows up, and again in January when the 1099-S arrives. Works for a 2026 sale and, with the notes on the 2025 form, for a 2025 sale.
0 of 25 ticked
01Sale documents from closing
02Purchase and basis records
03Improvements and basis adjustments
04Section 121 exclusion facts
05Rental use and home office
06Reporting and retention
What firms get wrong
- Treating box 2a of Form 1099-S as the gain. It is gross proceeds, and expenses are not subtracted.
- Adding mortgage points, loan origination fees or escrow deposits to basis from the purchase statement.
- Adding routine repairs such as painting to basis, while missing a larger improvement project that qualifies.
- Skipping the sale because the gain is under $250,000 when the client received a Form 1099-S.
- Ignoring depreciation from a past rental or home office, which cannot be excluded for periods after May 6, 1997.
- Assuming both spouses qualify for $500,000 without confirming each spouse's use of the home.
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Questions about this checklist
Does the client have to report the sale if all the gain is excludable?
If a Form 1099-S was issued, yes. The IRS says the sale goes on Form 8949 and Schedule D even when the gain is fully excluded. If no 1099-S was issued and the whole gain is excludable, it generally does not need to be reported.
What is different for a home sold in 2026 versus 2025?
The $250,000 and $500,000 exclusion amounts are the same in IRS Topic 701. For sales in 2026, Form 1099-S adds digital asset reporting in box 2c and boxes 8a to 8d. A 2025 sale reports on the earlier form and the 2025 return, filed in 2026.
What if the client lost the original purchase paperwork?
Ask the title company, county recorder or prior lender for a copy of the settlement statement. Rebuild improvements from bank statements, contractor emails and permits. If a client expects to qualify for the full exclusion, missing basis often changes nothing, but confirm before saying so.
Can one checklist ask only the questions that apply?
Yes. In Usual a yes or no answer such as rental use can show or hide follow-up items, so a client with no rental history never sees the depreciation request. Clients answer from a personal link with no password.
Sources
- IRS Topic 701: Sale of your home
- IRS Publication 523: Selling Your Home
- IRS Instructions for Form 1099-S
Checked November 9, 2026. Tax rules, forms and thresholds change; confirm them with the IRS or your tax software before relying on them.
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