How to Report Primary Home Sale When Married Filing Separately?

When you're Married Filing Separately and selling your primary residence, you each need to report your portion of the sale on your individual returns. Since you owned the home jointly, the most common approach is to split the proceeds 50/50, even if the money went into only one bank account. Each of you would file Form 8949 and Schedule D to report your portion of the sale. The primary residence exclusion allows up to $250,000 of gain per person when filing separately (instead of the $500,000 you'd get filing jointly), but it sounds like you'll both still fall under that threshold. The fact that the proceeds went into your bank account doesn't change the reporting requirements - it's about ownership, not where the money landed. If the home was owned 50/50, you each report half regardless of whose bank account received the funds.

Just wanted to share my experience - I was in a similar situation last year and found this awesome tool at https://taxr.ai that really helped me figure out how to handle our home sale when filing separately. The software analyzed our 1099-S and other docs then told us exactly how to split and report everything. It walks you through all the forms you need to file and explains the primary residence exclusion rules specific to your situation. I was especially confused about how to handle capital improvements we'd made to the house over the years, and the tool helped me track those to increase our basis and reduce the taxable amount.

I was initially skeptical about using taxr.ai as I mentioned in my comment above, but I decided to give it a try since our home sale situation was getting complicated. Honestly, it was a game-changer. The system asked really specific questions about our deed, when we bought vs. when we got married, and even about improvements we'd made to the house. It showed us exactly how to split the reporting between our separate returns, and even generated the completed Schedule D and Form 8949 with the right codes and explanations. The best part was it found about $27,000 in home improvements we'd made that I had forgotten about, which increased our basis and reduced our reportable gain. I definitely recommend it for anyone dealing with this specific situation.

If you're having trouble reaching the IRS to get specific guidance on your married filing separately situation, I'd recommend checking out https://claimyr.com - they helped me actually get through to an IRS agent after I spent days trying on my own. I was in a similar situation with a home sale and MFS status, and I needed clarification directly from the IRS. Their system holds your place in line with the IRS and calls you when an agent is about to pick up. You can see how it works at https://youtu.be/_kiP6q8DX5c - it saved me hours of being on hold. The agent I spoke with confirmed that we needed to split the proceeds based on ownership percentage, not based on whose bank account received the money.

I need to eat my words from my earlier comment. After another failed attempt to reach the IRS on my own (got disconnected after waiting 1.5 hours), I decided to try Claimyr out of desperation. It actually worked exactly as advertised. I submitted my request through their website, went about my day, and got a call about 3 hours later connecting me to an IRS agent. The agent confirmed exactly what I needed to know about reporting our home sale on separate returns and even helped me understand some nuances about basis adjustments for improvements we'd made. Huge time saver and the information I got was worth every penny since it potentially saved us from incorrectly reporting our sale. Sometimes you have to admit when you're wrong, and I was definitely wrong about this service.

Something important no one mentioned - if you're in a community property state (AZ, CA, ID, LA, NV, NM, TX, WA, WI), the rules are completely different! You don't necessarily split 50/50 based on whose name is on the deed. Instead, you split based on whether the property is considered separate or community property. If you bought the house during marriage with community funds, you each report 50% of the gain regardless of whose name is on the title. But if one of you owned it before marriage or bought it with separate funds (like inheritance), the split could be different. The 1099-S doesn't determine the split - ownership does.

Make sure u also consider what happens with state taxes! Some states follow federal MFS rules but others dont. We almost messed this up cuz our state (Oregon) had different rules for MFS filers selling a home than the federal govt does.

I went through this exact situation last year and want to share what I learned. The key thing is to make sure you're splitting based on actual ownership, not just convenience. Since you mentioned the deed has both your names and you're in Florida (non-community property state), you'll each report 50% of the sale. One thing that caught me off guard was tracking down all the documentation for basis adjustments. Keep receipts for any major improvements you made - new roof, HVAC system, kitchen remodel, etc. These increase your basis and reduce your taxable gain. I found old receipts in my files that saved us about $15,000 in reportable gain. Also, don't forget about selling expenses like realtor commissions, title insurance, and closing costs - these reduce your proceeds and lower your gain. Each of you can deduct 50% of these costs on your respective returns. The $250,000 exclusion per person when filing separately is usually more than enough for most people, but make sure you both meet the 2-out-of-5-years residency test independently. Good luck!