Tax News

CCH (cch.taxgroup.com) reports:

The IRS has updated a revenue procedure that provides guidance on the information reporting requirements for a sale or exchange of a principal residence. The new procedure, like the one it supersedes, describes the written assurances (certification) that a real estate reporting person must obtain from the seller of a principal residence to except the sale or exchange from the information reporting requirements for real estate transactions. The updated procedure includes assurances that take into account the effects of a like-kind exchange. Rev. Proc. 98-20,, 98-1 CB 549, is superseded.
Effective for the sale or exchange of a principal residence occurring after January 22, 2007, the updated procedure requires a seller to certify that during the five-year period ending on the date of the reported sale or exchange of the residence, the seller did not acquire the residence in an exchange to which Code Sec. 1031 applies. Further, if the seller's basis in the residence is determined by reference to the basis in the hands of a person who acquired the residence in a Code Sec. 1031 exchange, the seller must provide assurance that the exchange occurred more than 5 years prior to the date of the reported sale or exchange of the residence. The updated guidance also requires that the seller certify that the sellers spouse (and not just the seller) did not use any portion of the residence for business or rental purposes.
As with the prior guidance, the new guidance provides a suggested sample form for sellers to fill out. The new guidance also continues to require that a seller certify that: (1) the seller owned and used the residence as a principal residence for periods aggregating two or more years during the five years preceding the sale or exchange; (2) the seller did not sell or exchange another principal residence during the two years preceding the sale or exchange; (3) the seller did not use any portion of the residence for business or rental purposes; (4) the sale or exchange is of the entire residence for $250,000 or less; or, if the seller is married, the sale or exchange is of the entire residence for less than $500,000 and the sellers gain is $250,000 or less; or, if the seller is married and the sale or exchange is for $500,000 or less, the seller intends to file a joint return, the residence was also the principal residence of the seller's spouse for at least two of the five years preceding the sale and the seller's spouse also has not sold or exchanged a principal residence for two years preceding the sale or exchange. As with the prior guidance, a sample form using suggested language is provided.
Rev. Proc. 2007-12, 2007FED ¶46,279
Other References:
Code Sec. 6045
CCH Reference - 2007FED ¶35,930.26
Tax Research Consultant
CCH Reference - TRC REAL: 15,162