Form 8396

Form 8396 is an IRS form used to report the sale of a personal residence. The form is used to calculate the gain or loss on the sale of the home and to determine if any of the gain is taxable.

The form is divided into two parts. Part I is used to calculate the gain or loss on the sale of the home. Part II is used to determine if any of the gain is taxable.

To calculate the gain or loss on the sale of the home, you must first subtract the adjusted basis of the home from the sales price. The adjusted basis is the original purchase price of the home, plus the cost of any improvements you made to the home, minus any depreciation you claimed on the home.

If the sales price is greater than the adjusted basis, you have a gain on the sale of the home. If the sales price is less than the adjusted basis, you have a loss on the sale of the home.

The gain or loss on the sale of the home is then subject to capital gains tax. However, there are some exceptions to this rule. For example, if you lived in the home for at least two of the past five years, you may be eligible to exclude up to $250,000 of the gain from your income. If you are married, you may be able to exclude up to $500,000 of the gain.

If you are not eligible to exclude any of the gain from your income, you will have to pay capital gains tax on the entire amount of the gain. The capital gains tax rate is 15% for most taxpayers. However, if your taxable income is above a certain threshold, the rate may be as high as 20%.

Form 8396 is due on the same date as your federal income tax return. If you are filing an extension for your federal income tax return, you must also file an extension for Form 8396.

If you have any questions about Form 8396, you should consult with a tax professional.