Fillable Pa Schedule 19 - Sale Of A Principal Residence printable pdf download

PA Schedule 19

Sale of a

START

Principal Residence

Forward to Schedule PA 19

PA-19 (09–08) (FI)

PA DEPARTMENT OF REVENUE

GENERAL INSTRUCTIONS

Act 45 of 1998 excludes the gain from the sale of a principal residence if the seller meets the specific requirements described below. The law

excludes the entire gain. Pennsylvania does not follow the federal gain limits.

You do not need to submit this worksheet if you meet all the requirements described below and qualify for a full exclusion of gain.

However, if you used your home for nonresidential purposes with the intention to realize a profit, you complete this worksheet to calculate

your taxable gain or loss from the sale. A copy of the worksheet should then be included with your PA tax return. The information from this

worksheet will be used to complete PA Schedule D, which you must also submit with your PA tax return. If you do not qualify for the exclusion

but are reporting a gain or loss on the sale of a property that was used only for residential purposes, do not send this worksheet to the

Department. However, keep a copy for your records.

Important. The requirements for this exclusion apply individually. This means that married taxpayers reporting the sale of their principal

residence on separate PA tax returns must individually meet all the requirements to qualify for this exclusion. If only one spouse meets all the

requirements, the other spouse must pay tax on his or her share of the gain on his or her separate PA tax return.

However, if married taxpayers report the sale of their principal residence on a joint PA tax return, only one spouse must meet the requirements.

If unmarried joint owners sell a principal residence, each owner must meet the requirements separately.

What is a Residence? A residence is a house, lodging, or other place of habitation, including a trailer or condominium, that has independent

or self-contained cooking, sleeping, and sanitation facilities that the taxpayer physically occupied and used for residential purposes at some

time during the past five years.

A residence is not a property that the taxpayer:

•

Does not occupy; or

•

Uses only on a sporadic and transient basis; or

•

Uses only for a definite and promptly accomplishable purpose.

Taxpayers may exclude the gain from the sale of a principal residence if they meet each of these four requirements (1 through 4):

DATE OF DISPOSITION. The disposition of the principal residence must be after December 31, 1997. A disposition includes a sale,

exchange, taking by eminent domain, destruction, or other disposition of property giving rise to a taxable gain. The date of disposition is

the date the buyer accepts the deed and title passes from the seller to the buyer, usually the date of settlement. If the seller postpones the

delivery of the deed, the date of disposition is the date when possession and the burdens and benefits of ownership pass from the seller to

the buyer. For a condemnation, the date of disposition is the date when the taxpayer receives the condemnation proceeds. For destruction

or casualty loss, the date of disposition is the date when the taxpayer receives the casualty insurance proceeds or damages.

USE. The taxpayer used or had used the residence as the principal residence for a total of at least two years during the five-year period

preceding the date of sale.

Example 1. John bought a house in Harrisburg on January 1, 1995. He lived there until July 1, 1996. He changed jobs and moved to

Pittsburgh in July 1996. He maintained his Harrisburg home. He did not rent it or use it for any other purpose. He moved back to his

Harrisburg residence in 1997 and lived there until he sold it in 1999. John meets the requirement for using his house as his principal

residence for at least two years during the five-year period preceding the sale.

Example 2. Use the same facts as in Example 1, except John never moved back to his Harrisburg home. He does not meet the use

requirement for this exclusion. Even though he never rented his house or used it for any other purpose, John must pay PA income tax

on any gain he realized from the sale of his Harrisburg home.

Important. In determining whether a residence was occupied and used for residential purposes, a taxpayer need not consider:

•

An absence of less than ninety consecutive days, if the taxpayer does not make the residence available for rent during an absence.

•

An absence of any length, if the taxpayer is in a hospital, nursing home, or a personal care facility, and the taxpayer does not make

the residence available for rent during the absence.

OWNERSHIP. The taxpayer owned or had owned the residence as a principal residence for a total of at least two years during the five-

year period preceding the date of sale.

Example 3. Mary leased one half of a house in State College. She resided there since 1994. In 1996, she bought the entire property. She

used the entire property as her principal residence until she sold it in 1999. Mary meets the ownership requirement for this exclusion.

Example 4. Use the same facts as in Example 3, except Mary bought the house in 1998. She does not meet the ownership requirements,

even though she used the entire house as her principal residence. She must pay PA income tax on any gain she realized from the sale

of her State College home.

Important.

The taxpayer does not have to meet the use and ownership requirements simultaneously. However, the taxpayer must meet both during the

five-year period preceding the date of the sale. A taxpayer may lease a property as a personal residence for one year and then purchase the res-

idence. The taxpayer then lived in the residence for only one of the next four years. The taxpayer still qualifies for the exclusion. The taxpayer

lived in the residence for a total of two years, one as renter and one as the owner, and owned the residence for the last four years before the sale.

PRIOR SALE. The taxpayer did not sell another principal residence during the two years preceding the date of sale.

Example 5. Rob and Ann owned and lived in a house in Johnstown. In February 1996, they moved to Erie and bought a new house.

In August 1996, they sold their Johnstown home. They owned and used the Erie home as their principal residence until they sold it in

June 1999. They meet all the requirements for this exclusion.

Example 6. Use the same facts as in Example 5, except Rob and Ann sold their Johnstown home in August 1997. They do not meet the

prior sale requirement for this exclusion. They owned and used their house for at least two years during the five-year period preceding

the sale. However, they must pay PA income tax on any gain they realized from the sale of their Erie home, because they sold a

previous principal residence within two years of their 1999 sale.

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Pa Schedule 19 - Sale Of A Principal Residence

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