DEAR BOB: If I add my 22-year-old son’s name on the deed to my home for a 50 percent share, can he and I each claim the $250,000 profit tax exemption for a total of $500,000, providing we both lived in the property for two out of the last five years before the sale? – Paul H.
DEAR PAUL: Yes. However, both you and your son must have owned and occupied the home as your primary residences for at least 24 of the 60 months before its sale. Then you each can qualify for up to $250,000 tax-free principal residence sale profits under Internal Revenue Code 121. For full details, please consult your tax adviser.
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NO LIMIT TO USE OF INTERNAL REVENUE CODE 121
DEAR BOB: Is there a limit to the number of times I can purchase a home, live in it for two out of the five years before its sale, and claim the capital gains exclusion? – Cormac C.
DEAR CORMAC: There is no limit to the number of times you can use the Internal Revenue Code 121 principal residence sale exemption up to $250,000 (up to $500,000 for a qualified married couple filing a joint tax return).
However, this great tax break cannot be used more frequently than once every 24 months. More details are available from your tax adviser.
CAN HOME CO-OWNER FORCE A SALE WITHOUT LAWSUIT?
DEAR BOB: My boyfriend and I bought a new home in March 2003. We hold the title as tenants-in-common. I am seriously considering dissolving the relationship, but I have concerns about getting my fair share so I can buy another home for my three children and myself. We agreed we each equally own 50 percent, with the exception of the $10,000 cash down payment he paid to buy the home. What happens if we split and he refuses to sell the home? Can he be forced to either refinance the mortgage in his name only, or pay me my share based on an appraisal? Would I be forced to bring a partition lawsuit? – Heidi P.
DEAR HEIDI: Unless you have a written partnership agreement with your boyfriend co-owner, you can’t force him to refinance or buy you out. Your only legal alternative is a partition lawsuit to force the sale of the property. However, if he wants to keep the house, when he realizes you are serious about bringing a partition lawsuit, he might decide it will be far easier and cheaper for him to refinance so he can buy out your 50 percent, minus $10,000, and say “good-bye” on a friendly basis. For full details, please consult a local real estate attorney.
The new Robert Bruss special report, “How to Earn Up to $250,000 (or more) Tax-Free Profits Every 24 Months Buying and Selling Houses,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet PDF delivery at www.bobbruss.com. Questions for this column are welcome at either address.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
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