When I sell my house, will the title company issue 1099s regardless? Do they ignore the original purchase cost?

Thanks for explaining! So even though they report the full sale amount, I won't actually be taxed on that amount? I've definitely lived in my house for more than 2 years. Also, do I need to worry about keeping receipts for all the improvements I made over the years? Some of them were paid in cash and I'm not sure I kept great records.

You won't be taxed on the full sale amount - you'll only be taxed on your profit (the sale price minus your cost basis), and even then, the Section 121 exclusion will likely reduce or eliminate any tax liability based on your situation. Regarding improvements, ideally you should have documentation for all substantial improvements as these increase your cost basis and reduce your taxable gain. For the improvements you've already made, gather whatever documentation you can - receipts, canceled checks, credit card statements, contractor invoices, etc. Even if your records aren't perfect, try to reconstruct reasonable estimates with whatever supporting evidence you have.

How does it work with accessing older documents? My purchase paperwork is from 2015 and some of it is probably in storage. Do I need to scan everything in or can I just enter the numbers manually?

Seems suspicious that a website could understand complex real estate tax situations... Did it actually save you money compared to just using TurboTax or going to an accountant? I'm selling a house that's gone up like $200k in value but I've put at least $80k into renovations.

You can either scan documents or take pictures with your phone - the system can read most document types including settlement statements and receipts. For older documents that might be faded or difficult to read, their system still works surprisingly well. If some documents are missing, you can enter information manually. I definitely saved money compared to my accountant who wanted to charge me $850 for handling the house sale portion of my taxes. It was also much faster than manually entering everything into TurboTax, which doesn't give you much guidance on home improvement expenses. In your case with $80k in renovations, having those properly documented and calculated would make a huge difference in your tax liability.

Wait, this actually works? How is that even possible when the IRS phone lines are impossible to get through? I've been trying to clarify some questions about my home sale for weeks and keep getting disconnected.

Sounds too good to be true. I've literally spent HOURS on hold with the IRS and never got through. How could some service magically get you to an agent? I bet they're just connecting you to some fake "tax experts" who aren't actually from the IRS.

Yes, it actually works! It uses some kind of technology that navigates the IRS phone system and holds your place in line. When they're about to connect to an agent, you get a call back. I was skeptical too but the person I spoke with was definitely an IRS employee - they verified my information and answered questions about IRS procedures only an actual agent would know. The service just gets you past the hold time and connection issues. Once you're connected, you're talking directly to the real IRS, not some third-party "experts." I confirmed this because the agent referenced specific information from my previous tax filings when answering my questions.

I'm in Illinois - does anyone know if they do withholding here too? My closing is scheduled for about 6 weeks from now, so I want to make sure I understand everything before then. Should I be talking to my real estate agent about this or the title company directly?

Illinois doesn't have automatic withholding for residents selling property within the state. If you're an Illinois resident selling Illinois property, you shouldn't face withholding at closing. I'd recommend talking to both your real estate agent and the title company to confirm. Your agent should have experience with local closing procedures, but the title company is ultimately responsible for handling the financial and legal aspects of the transaction, including any tax reporting requirements.

What's the difference between "improvements" and "repairs"? I replaced my roof last year for $15k, is that an improvement or a repair?

A roof replacement is generally considered a capital improvement, not a repair, so you should be able to add that $15k to your basis! The IRS distinguishes improvements as things that add value to your home, extend its useful life, or adapt it to new uses. A full roof replacement definitely extends the useful life of your home. Repairs, on the other hand, are things that keep your property in good working condition but don't add significant value - like fixing a few broken shingles or patching a small leak. Since you replaced the entire roof, that's definitely an improvement that increases your cost basis and reduces your taxable gain when you sell.