Sale of home under 2 not in taxpayers name

[John Gribbin]

Dad was on title to home since taxpayers (kids) could not qualify for the loan.
We took the mortgage interest as the home was for all practical purposes owned by the taxpayer/kids and in fact they did owe the Dad. I believe this is ok with the IRS.

Taxpayer/kids actually bot the home from dad a year ago and have now sold it.

They lived in the home 5 years but only on title with the mortgage company for 1 1/2 years.

For Sec 121 exclusion purposes, can we show owned over 2 years?

Help...
John

Gribbin Tax Service
John D. Gribbin, EA

[jainen]

Why not?

>>can we show owned over 2 years?<<

Why not? One year for the husband, and one year for the wife.

[sea-tax]

Dad was on title to home since taxpayers (kids) could not qualify for the loan.
We took the mortgage interest as the home was for all practical purposes owned by the taxpayer/kids and in fact they did owe the Dad. I believe this is ok with the IRS.

Taxpayer/kids actually bot the home from dad a year ago and have now sold it.

They lived in the home 5 years but only on title with the mortgage company for 1 1/2 years.

For Sec 121 exclusion purposes, can we show owned over 2 years?

Help...
John

Gribbin Tax Service
John D. Gribbin, EA

If I understand you correctly , I would say no the kids do not qualify for sec 121 exclusion. Per the TTb page 6-20 it lists the requirements. Based on what you said the loan and who's name it is listed on is irrelavant it is who's name is on the title. However they may qualify for a reduced amount if they meet the certain requirements of the reduced sec 121 exclusion .

[jainen]

ok with the IRS

>>We took the mortgage interest as the home was for all practical purposes owned by the taxpayer/kids and in fact they did owe the Dad. I believe this is ok with the IRS.<<

No, it isn't "ok with the IRS." The only support for this position is a case from 1992 that the IRS fought every step of the way. Tax Court sided with the taxpayer but only in a narrow ruling that you can't use for precedent. It was substantially different from your case anyway. The taxpayers had a relative buy a new property and quitclaim title to them. That's not the same as the father refinancing and then selling the house to the kids.