While the IRS can't track the sale of your property in cash or the contents of the safe deposit box, car and loan repayment transactions will represent a glaring red flag. Residential rental property can include an individual home, an apartment, a condo, a mobile home, a vacation home, or similar property. These properties are often referred to as homes. Taxpayers who rent a property can use more than one home as a residence during the year.
Real estate taxes and mortgage interest are generally included in the home payment. If you applied for a mortgage (loan) to finance the purchase of your home, you will probably have to make monthly payments on the house. Paying for your home can include several costs of homeownership. The only costs you can deduct are the state and local real estate taxes that are actually paid to the taxing authority and the interest that is considered mortgage interest, mortgage interest and mortgage insurance premiums.
These are discussed in more detail below. Qualified mortgage insurance is mortgage insurance offered by the Department of Veterans Affairs, the Federal Housing Administration or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998, effective December 20, 2000). So what exactly happens to IRS taxes on home sales? Generally, when a taxpayer sells a house (or any other real estate), the title company managing the closing generates a Form 1099 that sets the sales price received for the house.
