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Sandi Hargrove, SkyHawks
Sandi Hargrove, SkyHawks, Master Tax Advisor, Enrolled Agent
Category: Tax
Satisfied Customers: 1257
Experience:  I am a Master Tax Advisor and Enrolled Agent. I have 40 years experience. Trucking specialist.
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Life estate and home proceeds

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My Mother is 79 years of age. She had a life estate set up for her house and then the house and land would go to my sister and me. My Mother had to come to live with me so she sold her home.
Can she hold her proceeds to decide if she wants to purchase another home without being taxed this year. She might want to purchase something close to us if her health permits. Is this okay with the IRS?

 She will be eligible to exclude up to 250000 of capital gain if the house was her primary residence for 2 years of the 5 year period prior to the sale.  No reporting nor reinvestment in another home will be required.


If she does have capital gain in excess of 250000, report only the excess amount in the year of the sale.  No reinvestment in another home will be required.

Customer: replied 11 years ago.
Reply to Sandi Hargrove, SkyHawks's Post: With the Life Estate involement, when Mom sold the house, the proceeds were made to my Mother, my sister and me at closing. Does this mean, we have to "divide" the proceeds so my sister and I can report a share on our tax returns as capitol gains? Mom does not have a lot of money, so we are basically trying to preserve as much of the money for her needs. She is unable to live alone and she is no longer able to drive. Mom's health made it a hazzard for her to live alone in her home any longer. Do you know if my sister and I can consider the life estate absolved since she is still alive and due to extenuating circumstances had to sell the house? If we do have to report our portions on our tax return, how do we determine the percent of the portions that would belong to my sister and me and my Mom?

 The sale will be treated as if your mother were the owner.  She may be eligible to exclude up to 250000 of capital gain if she lived in the home as her principal residence for at least 2 years of the 5 year period prior to the sale.


Absences from the home for visits elsewhere or for medical treatment is considered to have lived there.

Sandi Hargrove, SkyHawks, Master Tax Advisor, Enrolled Agent
Category: Tax
Satisfied Customers: 1257
Experience: I am a Master Tax Advisor and Enrolled Agent. I have 40 years experience. Trucking specialist.
Sandi Hargrove, SkyHawks and other Tax Specialists are ready to help you
Customer: replied 11 years ago.
Reply to Sandi Hargrove, SkyHawks's Post: To make sure I understand and that I am interpreting your reply correctly, as we are preparing to file our taxes.. My sister and I are not required report any of the proceeds for the sale of my Mom's house even though the check from the lawyer at closing was made to all 3 of us? Since the Life Estate kept the house for Mom until her death, I view the house and the proceeds as if she is the owner since she did not expire. She just had to sell for health and other reasons. BTW, my Mom is eligible to exclude the proceeds as capital gains as you stated. I will not bug you again with this question. I will add to the original amount of pay for this extra question!!
Customer: replied 11 years ago.
Reply to Sandi Hargrove, SkyHawks's Post:Copied from my last part of my posting! I am not sure if you will get this or not so I am posting again!! To make sure I understand and that I am interpreting your reply correctly, as we are preparing to file our taxes.. My sister and I are not required report any of the proceeds for the sale of my Mom's house even though the check from the lawyer at closing was made to all 3 of us? Since the Life Estate kept the house for Mom until her death, I view the house and the proceeds as if she is the owner since she did not expire. She just had to sell for health and other reasons. BTW, my Mom is eligible to exclude the proceeds as capital gains as you stated. I will not bug you again with this question. I will add to the original amount of pay for this extra question!!

Edited byCustomeron April 07 2005 at 4:04pm
Customer: replied 11 years ago.
Reply to Sandi Hargrove, SkyHawks's Post: Reply to Sandi Hargrove, SkyHawks's Post: Copied and Pasted!To make sure I understand and that I am interpreting your reply correctly, as we are preparing to file our taxes.. My sister and I are not required report any of the proceeds for the sale of my Mom's house even though the check from the lawyer at closing was made to all 3 of us? Since the Life Estate kept the house for Mom until her death, I view the house and the proceeds as if she is the owner since she did not expire. She just had to sell for health and other reasons. BTW, my Mom is eligible to exclude the proceeds as capital gains as you stated. I will not bug you again with this question. I will add to the original amount of pay for this extra question!!

Edited byCustomeron April 07 2005 at 4:04pm

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