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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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Do Capital Gains Tax Need to be Paid

Customer Question

My parents own 2 homes. 1 they live in and the other I live in. I pay all the expenses on the house I live in (mortgage , insurance, taxes, HOA etc...) Both homes are being sold and we will be taking the proceeds and purchasing 1 (way larger) home for all of us to live together since they can no longer affod their home. Do they have to pay capital gain tax on the home I live in if the money will be reinvested in a home that will be their primary and only reisdence?
Submitted: 11 years ago.
Category: Tax
Expert:  Sandi Hargrove, SkyHawks replied 11 years ago.

They will be eligible to exclude up to 500000 of capital gain (250000 for each of them) if they owned and lived in the home as their primary residence for at least 2 years of the 5 year period prior to the sale.


They may exclude their portion on different homes if they qualify, but the maximum for each home is 250000 for each of them and not a combination of the sale of both homes.


Example: dad may want to use his 250K on the home they live in now. Mom may use her 250K on the home you now live in if she also lived there for 2 years in the last 5 years as her primary residence.


If their move is due to health reasons, job reasons or due to unforseen circumstances, only a part of the 250K exclusion may be available to each of them.


Only one exclusion may be used by each of them in any 2 year period.

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