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My parent's primary residence was sold in 2017 when they…

My parent's primary residence...

My parent's primary residence was sold in 2017 when they moved into assisted living. They purchased the land in the late 70's and built the home in the mid 80's. They are currently 86 and 84 and have no memory of where any documents related to land purchase or construction of the home may be. How do we compute basis of the cost of the home for tax purposes?

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3/24/2018
Richard
Richard, Tax Attorney
Category: Tax
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Good afternoon. Can you tell me the sale price? Thanks.

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Customer reply replied 1 month ago
$195,000

Thank you. In that case, it makes no difference what the basis is because of Section 121 of the Internal Revenue Code. Since this was their principal residence since the purchase, and they are married, under Section 121 of the Internal Revenue Code, they can exclude up to $500,000 of gain from the sale of their principal residence. Thus, since the sale price was only $195,000, even if the basis is zero, the gain does not exceed $500,000; thus any and all gain would be excluded from income under Section 121. This is a link to that Code section: https://www.law.cornell.edu/uscode/text/26/121

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Richard
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Customer reply replied 1 month ago
Thanks for your help

My pleasure! :) Take care!

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