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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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My dad is 75 years old and he just sold a house. He moved ...

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My dad is 75 years old and he just sold a house. He moved to another residence in 2005. A family member stayed there for 1 year. After that we rented it for the past 2 years. How can he avoid paying taxes on the sale? We are living in NC. The house sold for 150,000.
Submitted: 9 years ago.
Category: Tax
Expert:  Merlo replied 9 years ago.

The IRS allows a homeowner an exemption on capital gains tax from the sale of your primary residence, if you used the home as your primary residence in at least two of the five years preceding the sale. Since you have indicated that your father did not move to another residence until 2005, it is possible he still qualifies for the exemption. An example would be - If you owned a home from Jan 1, 2003 and sold it on Jan 1, 2008, as long as you lived there for two years sometime during that five year span, you would qualify for the exclusion on the sale. So if he lived there from 1/1/03 to 1/1/05 he would qualify.

If your father does not qualify for the exclusion of sale, then he would be taxed on the gain he realized from the sale of home, which would be the sales price less his basis. The gain would be taxed at the long term capital gains tax rate which is currently capped at 15%.

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