Unqualified use of home

[JG EA]

TP lived in home for 2 out of the last 5 years (and owned), but rented it 2 1/2 years ago and it was a rental into 2009 before it sold.

For unqualified use:
The numerator is 120 days (for the part in 2009) but the denominator is my question.
The taxpayer owned the home jointly forever. Then TP inherited it from her husband 7 years ago. So, do I use the date from inheritance or the date when originally owned?

[taxea]

The dates she owned the home.

[JG EA]

Yes, but she owned the home jointly with her husband and the percentage would be off because the profit would be so different after she inherited the home. Her FMV basis went way up at that time. But perhaps none of that matters and just the time she owned would be correct and figure the profit times that percentage?

[S T]

Inherited

JG - just to be clear, are you saying the t/p inherited the home and received stepped up basis? And if that is the case, what year did she inherit the home?

I really don't know the answer, but maybe the above would be material in the "new" calculations.

Sandy

[JG EA]

They owed it for about 20 years - she inherited 7 years ago - she rented it out 2 1/2 years ago.

[taxea]

take the husband out of the equasion and she owned and lived in the home for two out of the past 5 years so what is the problem?

[JenMO]

Is the unqualified use a result of the new rule for selling a house after Dec 31,2008? My client couldn't sell his house, rented it for 1 1/2 years and sold in 2009. Is that rental time going to considered unqualified? I know he will have to pay on the deprec of the rental, but is that time unqualified, too?

[Gretel]

This link might help:

http://www.law.cornell.edu/uscode/26/usc_sec_26_00000121----000-.html

The way I understand it is that all the times counts that the property was owned, which would be 20 years. If I understand right, she owned 50% for 20 years.

Inheritance and Step-up only figures into her basis but has no bearing on time the property was owned.