Level 2

Section 121 Exclusion

Forum|Forum|1 year ago
September 10, 2024
2 replies
7 views

Facts: Son, mother and father are all owners in a home. The son lives in the home, but the parents do not. The son wants to sell the home.

Question: If the parent's gift their 2/3 ownership to the son and then the son sells the home - can the son use the entire Sec 121 exclusion based on his filing status??

Thank you in advance!

A Borges

qbteachmt

Level 15

There's an ownership component and a usage component. Does he intend to live there long enough to meet the ownership requirement?

Don't yell at us; we're volunteers

T

taxmo

Intuit Community Champion

Only if he waits two years after the date they gift their 2/3 portion to him.

The way it works is when there are joint owners, each owner can qualify to exclude $250,000 from their portion of the gains on sale if they meet all the qualifications. So as it is, he would qualify to deduct $250k from his gains, but the parents would not.

They can't just gift their interest in the property to him and have him qualify right away to deduct the gains from the whole property, because that portion of the property wouldn't yet meet the 2 year requirement.

A

annbAuthor

Level 2

Thank you for your promptness in answering my question.

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