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                  PA SCHEDULE 19 
                  Taxable Sale of a  
       START      Principal Residence 
                  PA-19 (EX) 10-19 (FI) 
       Ü          PA DEPARTMENT OF REVENUE         20                                                                                                                      OFFICIAL USE ONLY
Name(s) as shown on PA-40                                                                                              Primary Taxpayer’s Social Security Number

Street Address of Residence Sold                                                                                       Spouse's Social Security Number

City                                                                 State         ZIP Code

   SECTION I               RESIDENTIAL USE QUESTIONS
QUESTION 1.     What was the date of disposition for the residence? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                     
QUESTION 2.Did the taxpayer use or have use of the property for a total of at least two years during                                                                       MM/DD/YYYY
                  the five-year period preceding the date of disposition?                                                         Yes     No 
QUESTION 3.Did the taxpayer own the residence as principal residence for a total of at least two years  
                  during the five-year period preceding the date of disposition?                                                     Yes     No 
QUESTION 4.Did the taxpayer sell another principal residence during the two years preceding the date  
                  of disposition?                                                                                                               Yes     No 
QUESTION 5.At any time during the principal residence ownership period, was any part of the property  
                  surrounding the principal residence used for business purposes?                                               Yes     No 
QUESTION 6.At any time during the principal residence ownership period, was any part of the principal  
                  residence itself used for business purposes?                                                         Yes     No                                           
If the answers to Questions 5 and 6 are both "NO", go to Section II. 
COMPLETE LINES 1A, 1B AND 1C IF YOU ANSWER "YES" TO QUESTION 5. 
1a.    Enter the fair market value of the property used for residential purposes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1a.  
1b.    Enter the fair market value of the entire property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1b.  
1c.    Residential Use Ratio. Divide Line 1a by Line 1b and enter as a decimal using six decimal places. 
         Enter here and also enter on Line 9 below if the answer to Question 6 is "NO". . . . . . . . . . . . . . . . . . . . . . . . . .1c.  
COMPLETE LINES 2A, 2B AND 2C IF YOU ANSWER "YES" TO QUESTION 6. 
2a.    Enter the total Square footage used for residential purposes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2a.  
2b.    Total square footage of entire property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2b.  
2c     Residential Use Ratio. Divide Line 2a by Line 2b and enter as a decimal using six decimal places. 
         Enter here and also enter on Line 9 below if the answer to Question 5 is "NO". . . . . . . . . . . . . . . . . . . . . . . . . .2c.   
COMPLETE LINE 3 IF YOU ANSWER "YES" TO BOTH QUESTIONS 5 AND 6. 
3.      Multiply Line 1c by Line 2c and enter the result as a decimal using six decimal places. . . . . . . . . . . . . . . . . . . . .3.

   SECTION II COMPUTING THE GAIN OR LOSS
                                                                                                                                                                           MM/DD/YYYY
4.      Date the property was acquired. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.  
5.      Face value of seller financed mortgage on which payments of principal and interest will be received. . . . . . . . .5.  
6.      Ownership ratio using six decimal places. See the instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.  
7.      Gross proceeds less expenses of sale for the entire property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.  
8.      Multiply Line 7 by Line 6 and enter the result. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.  
9.      Enter the Residential Use Ratio from Line 1c, 2c or 3 above as appropriate. See the instructions. . . . . . . . . . . .9. 
10.    Multilply Line 8 by Line 9 and enter the result. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.  
11.    Subtract Line 10 from Line 8 and enter the result. If Questions 5 and 6 above were  
         answered "NO", this amount will be zero. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11. 
12.    Adjusted or alternative basis of entire property. See the instructions if property was  
         acquired prior to June 1, 1971. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12.  
13.    Adjusted or alterntive basis of property used for nonresidentlal purposes. See the instructions  
         if property was acquired prior to June 1, 1971. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.  
14.    Subtract Line 13 from Line 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.  
15.    Multiply Line 14 by the ratio on Line 6 and enter the result. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .LOSS. . .15.  
16.    Subtract Line 15 from Line 10 and enter the result. See the instructions. If a loss, fill in the oval. . . . . . .                           16.  
                                                                                                                                             LOSS
17.    Subtract Line 13 from Line 11 and enter the result. See the instructions. If a loss, fill in the oval. . . . . . .                           17.  
.

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Instructions for Schedule PA-19
PA-19 IN (EX) 03-20 Taxable Sale of a Principal Residence

Schedule 19 must be completed and included with their
WHAT’S NEW
return.
The instructions for PA Schedule 19 have been updated to
follow the department’s standard formatting and branding. GENERAL INSTRUCTIONS
Additional section headings and instructions for Purpose of
the Schedule, Recording Dollar Amounts, Who Must REQUIREMENTS FOR EXCLUSION OF GAIN
Complete, Definitions and Examples have been added In order for the gain to be excluded, a taxpayer must meet
while various other areas of the instructions and form have each of the following four requirements:
been revised or reorganized to provide additional informa- 1. Date of Disposition. The date of disposition of the
tion or clarity to the form and instructions. principal residence must be after Dec. 31, 1997.
Use.2. The taxpayer used or had use of the residence
GENERAL INFORMATION as the principal residence for a total of at least two
PURPOSE OF SCHEDULE years during the five-year period preceding the date
PA Schedule 19 is used to determine if the gain on the sale of disposition. Refer to Examples 1 and 2 in the
of a principal residence meets the specific requirements to EXAMPLES section of the instructions for additional
be excluded from taxable income on the PA-40, Personal information.
Income Tax Return. Per Act 45 of 1998, the entire gain may 3.Ownership.The taxpayer owned or had owned the
be excluded, when applicable, as Pennsylvania does not residence as a principal residence for a total of at
follow the federal gain limits. PA Schedule 19 is also used least two years during the five-year period preceding
to calculate the amount of taxable gain on the sale of a prin- the date of disposition. Refer to Examples 3 and 4 in
cipal residence that does not meet the requirements or the EXAMPLES section of the instructions for addi-
when the seller used the property at any time during the tional information.
ownership period as business property. PA Schedule 19
4. Prior Disposition. The taxpayer did not sell another
may also be used to determine the amount of gain from the
sale of a principal residence to include on Line 8, of Section principal residence during the two years preceding
III of PA-40 Schedule SP, Special Tax Forgiveness, or to the date of disposition. Refer to Examples 5 and 6 in
include the amount of any gain or loss from the sale of a the EXAMPLES section of the instructions for addi-
principal residence in Line 8 of the PA-1000, Property Tax tional information.
or Rent Rebate Claim Form. IMPORTANT: The requirements for this exclusion
apply individually. This means that married taxpayers
RECORDING DOLLAR AMOUNTS reporting the sale of their principal residence on separate
PA tax returns must individually meet all the requirements
Show money amounts in whole-dollars only. Eliminate any to qualify for this exclusion. If only one spouse meets all the
amount less than $0.50 and increase any amount that is requirements, the other spouse must pay tax on his or her
$0.50 or more to the next highest dollar. share of the gain on his or her separate PA tax return.
However, if married taxpayers report the sale of their prin-
cipal residence on a joint PA tax return, only one spouse
WHO MUST COMPLETE
must meet the requirements. If unmarried joint owners sell
PA Schedule 19 must be completed and included with the a principal residence, each owner must meet the require-
PA-40, Personal Income Tax Return, when a sale of a prin- ments separately.
cipal residence does not meet the requirements for exclu-
NOTE: The taxpayer does not have to meet the use
sion or when the Additional Limitations apply. PA Schedule
and ownership requirements simultaneously.
19 must also be completed and included with the PA-40 if However, the taxpayer must meet both during the five-year
part or all of the residence was used for a business pur- period preceding the date of the sale. A taxpayer may lease
pose. PA Schedule 19 should be completed, but is not a property as a personal residence for one year and then
required to be included, with a PA-40 return when all the purchase the residence. The taxpayer then lived in the res-
Requirements for Exclusion of Gain as described later are idence for only one of the next four years. The taxpayer still
met for exclusion of 100% of the gain. All taxpayers should qualifies for the exclusion. The taxpayer lived in the resi-
complete the Residential Use Questions to determine if PA dence for a total of two years, one as renter and one as the

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owner, and owned the residence for the last four years          taxpayer must complete the Section I of PA Schedule 19 to 
before the sale.                                                determine residential use percentage. 
EXCEPTIONS                                                      More Than One Home 
Unforeseen Circumstances                                        The residence that the taxpayer physically occupied and 
A sale of a second principal residence is not disqualifying if  personally used the most during the five years preceding 
the sale is due to an unforeseen change in employment,          the sale is the principal residence. Moving furniture and 
health, or severe financial hardship. An unforeseen change      personal belongings into a residence does not qualify as 
is one caused by an accident, illness, loss of property,        use. Even if the taxpayer’s family physically occupied the 
casualty or other unexpected event beyond the control of        residence, it is not the taxpayer’s principal residence if he 
the taxpayer. Refer to Example 7 in the EXAMPLES section        or she did not occupy and use it. Refer to Example 8 in the 
of the instructions for additional information.                 EXAMPLES section of the instructions for additional infor-
ADDITIONAL LIMITATIONS                                          mation. 
Current or Previous Business Use 
No portion of a principal residence that was leased or used                DEFINITIONS                                
for business purposes with the intention to realize a profit,   BUSINESS PURPOSE 
and was subject to the allowance for depreciation during        Business purpose includes, but is not limited, to whenever 
the taxpayer’s holding period, qualifies for the exclusion.     part or all of the property was used at any time during the 
For example, a taxpayer who claimed and received allow-         seller’s ownership period as a home office, storage area for 
able office-at-home expenses, including depreciation, may       business related property, store front, rental property, 
not exclude the gain on that portion of the principal resi-     industrial, commercial, investment or any other nonresiden-
dence. This applies even if the taxpayer stopped claiming       tial purpose. Property used for business purposes may 
office-at-home expenses. If current or previous business        have had related income and/or expenses reported and 
use, a taxpayer must complete Section I of PA Schedule 19       deducted on PA-40 Schedule C, Profit or Loss from 
to determine the residential use percentage.                    Business or Profession, PA-40 Schedule UE, Allowable 
                                                                Employee Business Expenses, PA-40 Schedule F, Farm 
Deceased Taxpayer Sale 
                                                                Income and Expenses, or PA-40 Schedule E, Rents and 
The authorized representative of a decedent may claim this      Royalty Income (Loss), during the ownership period. 
exclusion on the final PA tax return of an otherwise qualify-
ing decedent, only if the decedent entered into the sales       DATE OF DISPOSITION 
agreement before death. The decedent’s estate or trust          The date of disposition is the date the buyer accepts the 
may not exclude the gain from the sale of the decedent’s        deed and title passes from the seller to the buyer, usually 
principal residence.                                            the date of settlement. If the seller postpones the delivery 
                                                                of the deed, the date of disposition is the date when pos-
Mixed Use Property 
                                                                session and the burdens and benefits of ownership pass 
If a taxpayer sells property that he or she used partly as a    from the seller to the buyer. For a condemnation, the date 
principal residence and partly for business, commercial,        of disposition is the date when the taxpayer receives the 
industrial, rental, investment, or other nonresidential pur-    condemnation proceeds. For destruction or casualty loss, 
poses, then:                                                    the date of disposition is the date when the taxpayer 
   1. The taxpayer determines the gain separately on the        receives the casualty insurance proceeds or damages. 
  portion of the property used for residential purposes         DISPOSITION 
  and the portion of the property used for other purpos-
                                                                A disposition includes a sale, exchange, taking by eminent 
  es; and 
                                                                domain, destruction, foreclosure or other disposition of 
   2. The gain attributable to the property used for nonres-    property giving rise to a taxable gain. 
  idential purposes does not qualify for the gain exclu-
  sion. The taxpayer must report the gain or loss on PA         INCIDENTAL RENTAL 
  Schedule D.                                                   Incidental rental refers the rental period related to the sale 
                                                                of a home where the buyer or the seller occupy the home 
Such mixed-use property includes, but is not limited to, a      for a short period of time immediately before or after the 
sole proprietor’s residence above his retail store; a duplex    date of disposition. It does not refer to circumstances where 
where the owner rents one unit and lives in the other; and      a buyer enters a rent-to-own contract prior to the actual pur-
an office or licensed childcare facility located within a resi- chase of a residence or where a property is rented out until 
dence. Mixed use also includes property where the land          sold. 
surrounding the residence is more than the taxpayer rea-
sonably needs for a residence. The land surrounding a           PRINCIPAL RESIDENCE 
farmhouse that the taxpayer uses for commercial agricul-        The residence that the taxpayer physically occupied and 
ture, livestock breeding, or dairy purposes is not necessary    personally used the most during the five years preceding 
for residential purposes. If current or previous mixed use, a   the sale is the principal residence. Moving furniture and 

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personal belongings into a residence does not qualify as If the property was sold after Dec. 31, 1997, the answers to
use. Even if the taxpayer’s family physically occupied the Questions 2 and 3 are “Yes”, and the answers to Questions
residence, it is not the taxpayer’s principal residence if he 4, 5 and 6 are “No”, the taxpayer qualifies for the exclusion
or she did not occupy and use it. of the gain on the sale of a principal residence. PA
Schedule 19 is not required to be completed in its entirety
RESIDENCE
and should not be included with the taxpayers PA-40,
A residence is a house, lodging, or other place of habita-
Personal Income Tax Return. However, taxpayers that typ-
tion, including a trailer or condominium, that has independ-
ically qualify for Tax Forgiveness using PA-40 Schedule SP,
ent or self-contained cooking, sleeping and sanitation facil-
Special Tax Forgiveness, should complete Section II of PA
ities that the taxpayer physically occupied and used for res-
Schedule 19 to determine their gain. The gain determined
idential purposes at some time during the past five years.
in Section II is required to be included on Line 8 of PA-40
A residence is not a property that the taxpayer: Schedule SP. In addition, individuals who request a proper-
• Does not occupy; or ty tax rebate on the PA-1000, Property Tax or Rent Rebate
• Uses only on a sporadic and transient basis; or Claim Form, should complete Section II of PA Schedule 19
• Uses only for a definite and promptly accomplishable to determine their gain or loss. The gain or loss determined
purpose. in Section II is also required to be included with all other
gains and losses in Line 8 of the PA-1000.
USE
Use refers to consistent, continual occupancy by the tax-
payer for residential purposes. In determining whether a QUESTION 1
residence was occupied and used for residential purposes, Enter the date the residence was sold. If the property was
disregard absences of less than ninety consecutive days if sold after Dec. 31, 1997, go to Question 2. If the property
the property is not made available for rent during the sold prior to Jan. 1, 1998, the sale of the principal residence
absence. Absences of any length are also not required to may not qualify for an exclusion of the gain. Contact the
be considered if the taxpayer is in a hospital, nursing home, department for alternative tax rules with respect to reporting
or a personal care facility, and the residence is not made the gain on the sale of a principal residence for sales prior
available for rent during the absence. to Jan. 1, 1998. In addition, skip Questions 2, 3 and 4 and
go to Questions 5 and 6. If the answer to Question 5 and/or
Question 6 is “Yes”, complete the remainder of the sched-
SCHEDULE INSTRUCTIONS
ule to determine the gain or loss on the sale of the business
IDENTIFICATION INFORMATION use portion of the property on Line 17 only.

NAME(S) QUESTION 2
Enter the taxpayer’s name as shown on the PA-40. Include
both the taxpayer and spouse’s names if filing a joint return. If the answer to Question 2 is “Yes”, go to Question 3. If the
answer to Question 2 is “No”, the sale of the principal resi-
ADDRESS
dence does not qualify for an exclusion of the gain. Go to
Enter the address of the residence being sold in the appro-
Question 5 and complete the remainder of the schedule.
priate spaces.
Refer to Examples 1 and 2 in the EXAMPLES section of the
PRIMARY TAXPAYER’S SOCIAL SECURITY NUMBER instructions for additional information.
Enter the Social Security number (SSN) of the primary tax-
payer (name shown first on the PA-40, Personal Income QUESTION 3
Tax Return).
If the answer to Question 3 is “Yes”, go to Question 4. If the
SPOUSE’S SOCIAL SECURITY NUMBER answer to Question 3 is “No”, the sale of the principal resi-
Enter the spouse’s SSN if filing a joint return. dence does not qualify for an exclusion of the gain. Go to
Question 5 and complete the remainder of the schedule.
LINE INSTRUCTIONS Refer to Examples 3 and 4 in the EXAMPLES section of the
instructions for additional information.
SECTION I

RESIDENTIAL USE QUESTIONS QUESTION 4
Answer all of the questions as noted in Section I of PA If the answer to Question 4 is “No”, go to Question 5. If the
Schedule 19. If the taxpayer meets all the requirements for answer to Question 4 is “Yes”, the sale of the principal res-
the exclusion of the gain on the sale of a principal residence idence does not qualify for an exclusion of the gain unless
but the property was used for residential and other purpos- there are unforeseen circumstances. Go to Question 5 and
es, Questions 5 and 6 must be answered, If the answer to complete the remainder of the schedule. Refer to Examples
either Question 5 or 6 is “Yes”, Lines 1a through 3 must also 5, 6 and 7 in the EXAMPLES section of the instructions for
be completed as necessary. additional information.

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                      QUESTION 5                                                     LINE 2c                              
If the property sold also included other buildings or land    Divide the amount on Line 2a by the amount on Line 2b 
that was used for business purposes such as farming oper-     and enter the result here and also enter on Line 9 of 
ations, rental of a garage, business property storage, busi-  Section II of PA Schedule 19 when Question 5 is answered 
ness office, commercial enterprise, industrial or manufac-    “No”. Enter the amount as a decimal ratio entering the ratio 
turing reason, investment or any other nonresidential pur-    out to six decimal places. 
pose during the seller’s ownership period, answer the 
question “Yes”. Lines 1a through Line 1c must also be com-                           LINE 3                               
pleted. If only a residence was sold, answer the question 
                                                              Line 3 must be completed if the answer to both Questions 
“No”. 
                                                              5 and 6 are “Yes”. Multiply the amount on Line 1c by the 
                                                              amount on Line 2c. Enter the result here and on Line 9 of 
                      QUESTION 6 
                                                              Section II of PA Schedule 19. Enter the amount as a deci-
If the property sold consisted only of a principal residence  mal ratio entering the ratio out to six decimal places. 
and during the seller’s ownership period any part of the 
                                                                                   SECTION II  
principal residence was used at any time as a home office,                                                                
rental property (other than incidental rental), storage loca- COMPUTING THE GAIN OR LOSS  
tion for business property, storefront or any other nonresi-
                                                               
dential purpose, answer the question “Yes”. Lines 2a                                 LINE 4
                                                                                                                          
through 2c must also be completed. If the principal resi-
dence had no current or prior business purpose or use,        Enter the date the residence was acquired. 
answer “No”.                                                   
                                                                                     LINE 5                               
                       LINE 1a 
                                                              Enter the face value of any seller financed mortgage, note, 
Line 1a must be completed if the answer to Question 5 only    or other financial instrument on which the seller will receive 
is “Yes” or the answers to both Questions 5 and 6 are “Yes”.  periodic payments of principal and/or interest from this 
Enter the fair market value of the portion of the property    sale. Interest received on a seller financed mortgage is 
used by the seller for residential purposes only.             excludable for PA personal income tax purposes to the 
                                                              extent the gain on the sale of the principal residence is 
                       LINE 1b                                excludable. If the gain determined on Line 16 is excludable, 
                                                              multiply the total interest received by the Residential Use 
Line 1b must be completed if the answer to Question 5 only    Ratio to obtain the nontaxable (excludable) interest 
is “Yes” or the answers to both Questions 5 and 6 are “Yes”.  received. Subtract the non-taxable interest amount from 
Enter the fair market value of the entire property.           the total interest received to obtain the taxable interest 
                                                              amount. Any nontaxable interest received is included in 
                                                              Line 2 of Section III of PA-40 Schedule SP, Special Tax 
                       LINE 1c                                
                                                              Forgiveness. The nontaxable interest must also be includ-
Divide the amount on Line 1a by the amount on Line 1b         ed in Line 7 of the PA-1000, Property Tax or Rent Rebate 
and enter the result here and also enter on Line 9 of         Claim Form. 
Section II of PA Schedule 19 when Question 6 is answered 
“No”. Enter the amount as a decimal ratio entering the ratio                         LINE 6
out to six decimal places.                                                                                                
                                                              If the principal residence was owned with another person or 
                                                              persons, enter the taxpayer’s ownership interest as a dec-
                       LINE 2a                                
                                                              imal ratio. Refer to Examples 9 and 10 in the EXAMPLES 
Line 2a must be completed if the answer to Question 6 only    section of the instructions for additional information. If the 
is “Yes” or the answers to both Questions 5 and 6 are “Yes”.  property was only owned by the taxpayer or the property is 
Enter the square footage of the portion of the property used  being sold by a taxpayer and spouse filing a joint return, 
just for residential purposes. Do not include any portion of  enter the ratio as 1.000000. 
the property used for business purposes at any time during 
the seller’s ownership period                                                        LINE 7
                                                                                                                          
                       LINE 2b                                Enter the gross sales price or fair market value of cash and 
                                                              property received for the entire property, including the por-
Line 2b must be completed if the answer to Question 6 only    tion of the property used for nonresidential purposes, less 
is “Yes” or the answers to both Questions 5 and 6 are “Yes”.  any applicable expenses of sale, real estate commissions, 
Enter the square footage of the entire residence.             transfer taxes, etc. 

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LINE 8 LINE 15
Multiply the amount on Line 7 by the ratio on Line 6. This is Multiply Line 14 by the ownership ratio on Line 6. This is the
the portion of the sale proceeds attributable to the taxpayer. taxpayer’s portion of the basis in the residential use portion
of the property.
LINE 9
LINE 16

Enter the Residential Use Ratio, from Line 1c, Line 2c or
Line 3 above as appropriate. If the answers to Questions 5 Subtract Line 15 from Line 10 and enter the result. This is
gain or loss on the taxpayer’s portion of the property.
and 6 were both “No”, enter the ratio as 1.000000.
If the answer to either Question 2 or 3 is “No” or the answer
to Question 4 is “Yes”; this is the taxable gain on the sale of
LINE 10
a principal residence that is required to be reported. Report
Multiply Line 8 by Line 9 and enter the result. This is the the taxable gain on the sale of a principal residence on Line
residential use portion of the sale proceeds. 7 of PA Schedule D, Sale, Exchange or Disposition of
Property. A loss on the sale of a principal residence is a per-
sonal loss is not an allowable loss for PA personal income
LINE 11
tax purposes.
Subtract Line 10 from Line 9 and enter the result. This is the
If the answers to Questions 2 and 3 are “Yes” and the
nonresidential use portion of the proceeds from the sale of
answer to Question 4 is “No”; this is the excludable gain or
the residence. If the answers to Questions 5 and 6 were
loss on the sale of the principal residence.
both “No”, this amount will be zero.
Excludable gains must be reported on Line 8, of
LINE 12 Section III of PA-40 Schedule SP, Special Tax
Forgiveness. Excludable gain or loss must also be included
Enter the adjusted or alternative basis of the entire proper- in Line 8 of the PA-1000, Property Tax or Rent Rebate
ty. This usually is the same basis used for federal income Claim Form. Refer to Example 11 in the EXAMPLES sec-
tax purposes. Generally, the adjusted basis will be the orig- tion of the instructions for additional information.
inal cost of the property plus the cost of any improvements
less any accumulated depreciation allowed or allowable on LINE 17
the property. If the property was acquired before June 1,
Subtract Line 13 from Line 11. This is the gain on the sale
1971, the alternative basis must be determined for Line 12 of the business use portion of the property. Report the gain
using the methods prescribed on PA Schedule D-71, Gain on Line 1 of PA Schedule D, Sale, Exchange or Disposition
or Loss on Property Acquired Prior to June 1, 1971, (Form of Property. Refer to Example 12 in the EXAMPLES section
REV-1742) for determining Alternative Basis and of the instructions for additional information.
Determination of Fair Market Value as of June 1, 1971. The
alternative basis is Column e on PA Schedule D-71. EXAMPLES

EXAMPLE 1: John bought a house in Harrisburg on
LINE 13
January 1, 1995. He lived there until July 1, 1996. He
Enter the adjusted or alternative basis of the property used changed jobs and moved to Pittsburgh in July 1996. He
for nonresidential purposes. Adjusted basis is usually the maintained his Harrisburg home. He did not rent it or use it
original cost of the property, plus the cost of any improve- for any other purpose. He moved back to his Harrisburg
ments less the accumulated depreciation allowed or allow- residence in 1997 and lived there until he sold it in 1999.
John meets the requirement for using his house as his prin-
able on the property. If the property was acquired before
cipal residence for at least two years during the five-year
June 1, 1971, the alternative basis must be determined for
period preceding the sale.
Line 12 using the methods prescribed on PA Schedule
D-71, Gain or Loss on Property Acquired Prior to June 1, EXAMPLE 2: Use the same facts as in Example 1, except
1971, (Form REV-1742) for determining Alternative Basis John never moved back to his Harrisburg home. He does
and Determination of Fair Market Value as of June 1, 1971. not meet the use requirement for this exclusion. Even
The alternative basis is Column e on PA Schedule D-71. If though he never rented his house or used it for any other
the taxpayer answered “No” to Questions 5 and 6, this purpose, John must pay PA income tax on any gain he real-
ized from the sale of his Harrisburg home.
amount will be zero.
EXAMPLE 3: Mary leased one half of a house in State
LINE 14 College. She resided there since 1994. In 1996, she bought
the entire property. She used the entire property as her
Subtract Line 13 from Line 12. This is the residential use principal residence until she sold it in 1999. Mary meets the
portion of the adjusted or alternative basis. ownership requirement for this exclusion.

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EXAMPLE 4: Use the same facts as in Example 3, except EXAMPLE 11: Jason and Jamie sold their home on April
Mary bought the house in 1998. She does not meet the 23, 2019. They purchased the home on January 31, 1980
ownership requirements, even though she used the entire and used the home as their principal residence continuous-
house as her principal residence. She must pay PA income ly until it was sold. They did not own or sell another princi-
tax on any gain she realized from the sale of her State pal residence during the last two years of their ownership
College home. period. They purchased the property for $50,000 in 1980
and the net sales price after expenses of sale for the prop-
EXAMPLE 5: Rob and Ann owned and lived in a house in
erty was $65,000. Jason and Jamie offered a seller
Johnstown. In February 1996, they moved to Erie and
financed mortgage to the buyer with a face value of
bought a new house. In August 1996, they sold their
$57,000. Jason and Jamie were the sole owners of the
Johnstown home. They owned and used the Erie home as
property. Jason and Jamie qualify for the exclusion of the
their principal residence until they sold it in June 1999.
gain on the sale of their principal residence of $15,000.
They meet all the requirements for this exclusion.
In 2019, Jason and Jamie are retired and are both over 67
EXAMPLE 6: Use the same facts as in Example 5, except
years of age and have $10,000 of interest and dividend
Rob and Ann sold their Johnstown home in August 1997.
income of which $1,000 is nontaxable for PA personal
They do not meet the prior disposition requirement for this
income tax purposes as it was from the mortgage on the
exclusion. They owned and used their house for at least
sale of their home. They have no other income except pen-
two years during the five-year period preceding the sale.
sion income of $5,000 and Social Security income of
However, they must pay PA income tax on any gain they
$18,000 and $15,000, respectively. Jason and Jamie do
realized from the sale of their Erie home, because they sold
not qualify for Tax Forgiveness in 2019 because they must
a previous principal residence within two years of their
include the gain on the sale of their principal residence on
1999 sale.
Line 8 of Section III of PA-40 Schedule SP, and $1,000 of
EXAMPLE 7: Use the same facts as in Example 6, except nontaxable interest in Line 2 of PA-40 Schedule SP.
that Rob and Ann sold their Erie principal residence Therefore, their total eligibility income for determining Tax
because Ann’s employer relocated its operations to Forgiveness is $25,000 ($9,000 taxable income plus
Williamsport. They qualify for this exclusion because of an $1,000 nontaxable interest plus $15,000 of excludable gain
unexpected change in employment. on the sale of a principal residence).
EXAMPLE 8: Bill and Helen purchased a home in EXAMPLE 12: Same home and income facts as Example
Pittsburgh in January 1995. Bill began working in 11 except that Jason had a home office during tax years
Philadelphia in March 1995 and leased an apartment there. 1993 through 2012. Jason deducted a depreciation
He commuted to Pittsburgh on weekends, holidays, and expense on 10% of his home on PA-40 Schedule UE,
vacations. In January 1999, Bill and Helen sell their Allowable Employee Business Expenses, on their tax
Pittsburgh residence. Helen meets the use and ownership returns for each of those 20 tax years. Jason used the
requirements for the exclusion. Bill meets the ownership straight-line depreciation method with a 40-year useful life
requirement. Bill does not meet the use requirement. He and the accumulated depreciation was $2,500 for the 20
only used his Pittsburgh home for two months in 1995. His years. The total square footage of the home was 1,000
principal residence was his apartment in Philadelphia. square feet.
Helen qualifies for the exclusion on her half of the gain from
Jason and Jamie would be able to exclude $11,000 from
the sale of the Pittsburgh residence. Bill must pay PA
the sale of their principal residence. They would also be
income tax on his half of the gain. However, if Helen and
required to report $4,000 of gain on the sale of the busi-
Bill file a joint PA tax return, they both qualify for the full
ness use portion of the home and $100 of interest income
exclusion.
from their seller financed mortgage. Based upon the eligi-
EXAMPLE 9: The primary taxpayer and spouse jointly own bility income rules, Jason and Jamie would not qualify for
their home that had business use during their ownership Tax Forgiveness on PA-40 Schedule SP, as their eligibility
period. They are electing to file separate PA-40, Personal income would still be $25,000 ($13,100 of taxable income,
Income Tax Returns. Each qualify for the exclusion but $900 of nontaxable interest income and $11,000 of exclud-
must report the gain on the business use portion. Their able gain on the sale of a principal residence).
ownership ratios are 0.50.
EXAMPLE 10: A taxpayer and her brother and sister equal-
ly own a home. The taxpayer is the only one who lives in
the home. The taxpayer meets all the requirements for the
exclusion. The brother and sister do not qualify. The tax-
payer’s ownership ratio is 0.333333.

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