Two Main Homes

[Harvey Lucas]

They have ben married for many years.

He lives and works in the south end.

She lives and works in the north end.

In 2004, they jointly bought a home for her in the north end, paid 275,000
It is her main home.

In 2005, they jointly bought a home for him in the south end, paid 232,000
It is his main home.

They have always filed joint tax returns.

During 2008, they sold both of these homes and moved into a rented apartment together.

Her north end home Sale Price 385,000, cost 275,000, gain 110,000

His south end home, Sale Price 267,000, cost 232,000, gain 35,000

Can I report the sale of both homes as tax free excluded under the code 121 exclusion rules?

Harvey Lucas

[erchess]

Ttb 8-18-22

Assuming that they jointly own the homes then my reading is that you calculate an exclusion of half of the gain on each residence and tax them on the other half.

I also believe that had they had the foresight to title each house only in their respective names that they could exclude all of the gain unless perhaps they are in a community property state.

The problem is that there are ownership and use tests.

[taxea]

The only problem here is you can only sell one residence every two years. I have seen nothing that allows a MFJ to split the deduction. Had they files MFS all these years and had the homes in separate names you may have had an argument for allowing the split deduction. Unfortunately that is not the case here. Take the higher one and let them learn from their mistake. taxea

[erchess]

Upon reflection

I have to agree with taxea..