Pennsylvania Form PA-40 Schedule 19 – Sale of a Principal Residence (2026)

Last reviewed: 2025-11-11

Use the Pennsylvania Tax Form Calculator Pennsylvania Form PA-40 Schedule 19 – Sale of a Principal Residence as a stand alone tax form calculator to quickly calculate specific amounts for your 2026 Pennsylvania state tax return. Alternatively, you can use one of our Combined Federal and State Tax Estimators to quickly calculate your salary, tax, and take-home pay.

Schedule 19 is used to calculate the taxable gain or loss when selling your principal residence in Pennsylvania. While many home sales qualify for full exclusion, certain conditions — such as business use, rental portions, or insufficient ownership/use periods — can make part of the gain taxable. Pennsylvania follows its own exclusion rules under Act 45 of 1998, which differ from federal limits and do not impose dollar caps on the exclusion amount.

This form helps determine whether the sale meets the ownership and occupancy tests and how much of the gain, if any, must be reported as taxable income. It also separates residential and nonresidential portions when a property was partly used for business or investment. The term FMV refers to Fair Market Value — the price a willing buyer would pay a willing seller for the property under normal conditions.

You should complete Schedule 19 if your home sale involves any of the following: business use, partial rental, mixed-use property, or ownership for less than two years. Attach the completed schedule to your PA-40 return when filing.

How to Complete Schedule 19

Follow these steps when selling your home:

1. Section I – Residential Use Questions: Confirm whether you meet both the ownership and residence tests (at least two years each within the five-year period before sale). If the home was used partly for business, complete the FMV and square footage ratios to establish residential-use percentages.
2. Section II – Computing the Gain or Loss: Enter the sale price (less expenses), your adjusted cost basis, and any allocation between business and residential areas. The result will show your residential gain (generally excludable) and nonresidential gain (taxable).
3. Section III – Reporting: Report any taxable gain on Schedule D. If the sale qualifies for full exclusion, you do not need to include the gain on your return but should retain supporting documentation.

Always use accurate figures for property value, basis, and use ratios to ensure compliance with Pennsylvania tax law.

Examples and Scenarios

Example 1 – Full Exclusion: Jamie purchased a home in 2019, lived there continuously, and sold it in 2025 for a $90,000 gain. Having met the two-year ownership and residence tests and not used the property for business, Jamie qualifies for full exclusion — no Pennsylvania tax applies.

Example 2 – Partial Business Use: Alex operated a home-based accounting office that used 10 % of the property exclusively for business. Using Section I ratios, Alex determines that 10 % of the gain ($12,000 of a $120,000 total gain) is taxable as nonresidential income. The remaining 90 % ($108,000) is excluded.

Example 3 – Short Ownership Period: Morgan bought a home in 2023 and sold it in 2025 due to relocation. Since the ownership and residence periods are under two years, Morgan does not qualify for the exclusion. The entire gain is reportable as taxable under Schedule D.

Example 4 – Mixed-Use Property: Dana rented out a basement apartment representing 25 % of the home’s FMV. On sale, only the 75 % residential portion is excludable. The 25 % rental gain is taxable as Pennsylvania-source income.

Further Guidance and Related Forms

• Form PA-40 – Individual Income Tax Return
• Schedule D – Sale, Exchange or Disposition of Property
• Schedule UE – Employee Business Expenses
• Pennsylvania Department of Revenue – PIT Forms

Keep copies of your closing statement, settlement sheets, basis adjustments (such as improvements), and any business-use documentation. Pennsylvania may request supporting evidence for claimed exclusions or allocations. Properly completing Schedule 19 ensures accurate reporting and protects you in case of audit or review.

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Important Notes

All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.