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JKCPA
JKCPA, CPA
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We have just sold my mothers house. It was still in her name

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We have just sold my mother's house. It was still in her name only. She is 78 and in a nursing home. Will she owe capital gains on this sale? This property is in Kansas & she has been a resident of Kansas all her life.
Submitted: 6 years ago.
Category: Tax
Expert:  JKCPA replied 6 years ago.

Hello,

 

Thanks for your question.

 

A homeowner who becomes physically or mentally incapable of self-care and resides in a licensed care facility such as a nursing home is deemed to have resided in the home the time she lived in the home during the last 5 years plus the time she was in the nursing home.

 

If your mother meets the above paragraph and she lived in the house at least one year out of the last 5 years ending on the date of the sale of the home, she can exclude up to $250,000 (or $500,000 if married filing joint) of any gain on the sale. If she does not meet this rule, then she would have to pay capital gains tax on any gain amount.

 

Hope this helps,

Best regards,

 



Edited by JK_CPA on 6/1/2010 at 2:08 AM EST
Customer: replied 6 years ago.
So the last five years would be from June, 2005 until June, 2010. She went into the nursing home in January of 2007 and lived in the house before that. If I'm getting this right she is eligible to exclude up to $250,000 and since the house sale is well below that amount, she will not have to file capital gains. Am I right?
Expert:  JKCPA replied 6 years ago.

Yes, based on these dates, she must have been in her home over 1 year out of the last 5 years, so she qualifies for this one year rule since she moved into a nursing home. So yes, she can exclude up to $250K of the gain.

 

(note: for most people, the usual residence test is 2 years out of the last 5).



Edited by JK_CPA on 6/2/2010 at 2:57 AM EST
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