Ideas on 121

[JG EA]

I'm hoping for comments and ideas - taxpayer lived in home for many years, moved to a new home and put the first up for sale. Time went by and it is not selling and in another few months it'll be three years empty. We have set an appointment to to discuss tax consequences with actual numbers.

Aside from warning about any time in 09 cutting into the exclusion any other ideas? It is out of the question to give the home back, there is no intention to do any such thing and the taxpayer can continue to keep it for sale if necessary - it seems all the new benefits are based on people giving up the home.

One idea is to cut the price down by the amount the tax would have been. Any other ideas?

[Roland Slugg]

One idea is to cut the price down by the amount the tax would have been.

If the owners want to sell that house, they must reduce its price down to the current FMV. The potential taxes on the gain (if any) are not relevant.

[erchess]

If they don't like Roland's very sound advice

they can always take it off the market and either donate it to a charity for the tax savings or convert it to rental property.

[OtisMozzetti]

Breakeven for their advantage

One idea is to cut the price down by the amount the tax would have been.

It sounds like the breakeven for their advantage is to cut the price down to the currently-low FMV minus the tax on the 121 exclusion which is at risk of going bye bye. Up until now, they apparently haven't been serious enough about bringing their price down to a level the market will accept.

Another "disguised price cut"--to get the property to move--would be for them to offer seller financing, i.e. to sell it on the installment plan. Should it later have to be repossessed, their holding period would not include the period held by today's buyer, but I would be skeptical about seeing that suspend the 5-year period for purposes of the 121 exclusion.

[Gary]

They could

move back into the house for a while.

[JG EA]

Thanks for all your replies. The more I can mention the better.