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RE the sale of your primary residence and the law about ...

RE: the sale of your...
RE: the sale of your primary residence and the law about owning your house and living in it for at least 2 years to avoid paying any capital gains..........what if you have been living in a house for more than 2 years and you have a lease purchase contract for the house, and someone else has been carrying the loan, and the title to the house is still in that persons name and now you are going to sell the house to a 3rd party, and you plan on using the double escrow way to sell the house, where the title holder sells the house to us and the title is only in our name for a few minutes and then it goes to the 3rd party who is buying the house........can we meet the requirement of owning the house ( we do have a legal binding lease purchase document dated back to more than 2 years ago) or not???
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Answered in 3 minutes by:
2/2/2008
Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3,118
Experience: I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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The answer to this question will depend on the specifics of your lease purchase contract and who bears the "risk of loss" with respect to the house, If, under the terms of the contract, you have had all of the risks, rights, and responsibilites of ownership, you can probably sustain an argument that you have owned the house. If that is not the case, then you will not be treated as owning the property.

jon

Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3,118
Experience: I deal with all levels of tax planning and controversy - from the ordinary to the complex.
Verified
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Customer reply replied 9 years ago
Reply to Jon Andrews's Post: So our contract says things in it like, "buyer, during tenancy will be responsible for all maintenance and repairs, and buyer has permission to improve property during tenancy"    does this help to show that we have had all the risks, rights and responsibilities of ownership.........and a few years ago when our cistern tank came out of the ground and we were solely responsible for taking care of that.....and we have made many improvements to the house......does all of this help???   What other kinds of things should I look for in our contract??    Thankyou
Customer reply replied 9 years ago
Did you get my last question, I am just trying to figure out what things in my contract would help show that we have had all the risk, rights and responsibilities of ownership??
Thankyou

Yes, those are the kinds of things that would help. Other things to look for are - who is required to pay the property taxes and maintain insurance on the property? If the taxes (or insurance) go up, who pays the increase? Are you paying the exact amount of the taxes and insurance, or do you pay an approximate amount? For example, if the taxes started out at $1,147.50 per year and go up to $1,319.76, did your payment for taxes go from $1,150 to $1,325 or did it go from $1,147.50 to $1,319.76?

jon

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Customer reply replied 9 years ago
ok, thankyou!
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