Question

I have a question about reporting short sale on taxes. I sold my home in a short sale in 2019 for thousands of dollars less than the amount I owed on it. We didn’t buy another home, and are renting an apartment. Do I have to report the sale on my return?

Answer

Yes. You are responsible for reporting short sale on taxes. You must report the sale on Form 8949. This transfers to a Schedule D for the year of sale if:

  • You received a 1099-S or other substitute form.
  • You claimed the first-time homebuyer credit.

You should subtract your basis and selling expenses from your sales price to figure gain or loss. When reporting, any gain is taxable. Any loss — Such as when you are reporting short sale on taxes — Is a nondeductible personal loss.

You might also have cancellation of debt. It’s reported on Form 1099-C. Cancellation of debt is taxable in the year the debt was cancelled, unless an exception applies.

 

Related Topics

Related Resources

Is Your Capital Gain or Loss Short Term or Long Term?

How can you tell if a capital gain or loss is short term or long term? Find out more from the tax experts at H&R Block.

What Is a Wash Sale?

Generally, a wash sale is what occurs when you sell securities at a loss and buy the same shares within 30 days before or after the sale date. Wash sale rules are designed to prevent investors from creating a deductible loss for the purpose of offsetting gains with only a short interruption in owning the security.

How Renting Out Your Extra Bedrooms Affects Your Taxes

Thinking about renting out a room in your home? Learn more about the potential tax implications with the experts at H&R Block.

Tax On Unemployment Income

Does receiving unemployment benefits affect your refund and is it taxable income? Learn more from the tax experts at H&R Block.