Editor's note: Robert Bruss passed away on Sept. 26, 2007. This was one of the last real estate columns he wrote. Inman News is publishing Bob's last work as a final salute to the nation's most well-known real estate writer. DEAR BOB: In 1995, I acquired a residential rental property through an Internal Revenue Code 1031 tax-deferred exchange. In 2000, I gave the property to my son and his wife for use as their principal residence. I filed a federal gift tax return for fair market value in 2000. My son and his wife have continually occupied the house for the past seven years. Do they qualify for the $500,000 principal-residence-sale exclusion and what is their cost basis for this property gift? --Melvin F. DEAR MELVIN: Thanks to Internal Revenue Code 121, if your son and daughte...
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