Sec 121 Exclusion

[RWG1950]

My new WI customer is an un-married 84 year old female that has a 80 year old female long time live-in partner.
They apparently have each filed single tax returns over the years and each is on the deed as a 1/2 owner of their personal residence.
Both would seem to meet the 2/5 section 121 test.
Customer called & said they may sell this residence for $750-K. Total cost basis is about $300-K or so.
They consider themselves to be married - but do not appear to be legally wed. I was asked if the $500-K exclusion would apply.
As they each own 1/2 of their shared residence, would they each be able to claim a $250,000 exclusion on their single returns ?
Thanks for comments.





Haven't experienced the issue

[TaxGuyBill]

As they each own 1/2 of their shared residence, would they each be able to claim a $250,000 exclusion on their single returns ?

Yes (assuming all other rules are met).

[RWG1950]

Would it be necessary (or maybe advisable) to have the closing company issue separate checks and 1099 forms
for each of their 1/2 interests in the property at sale ?

[TaxGuyBill]

If the clients both own half and are receiving half, the closing company should already be doing that.

But yes, it would be easier to deal with on the tax return if the closing company does it correctly (splitting it) rather than doing it incorrectly (putting it all on one).


Or is there more to the situation that you haven't mentioned? *ARE* the proceeds being split?