From:  Paul
Date:  Wed, 01 Feb 2006

If two siblings jointly buy a house through a partnership in which each is a 50% partner, and one sibling uses the house as a primary residence, can that sibling benefit from the primary residence exclusion when the house is sold?

Answer

Date:  Mon, 06 Feb 2006

Hello Paul,

Owning the home as a partnership muddies the waters. I suggest the home should be owned as tenants in common (undivided interests). Then the resident owner should qualify for the exclusion.

(By the way, even though many families are buying homes this way, tax-wise it’s very messy.)

Good luck!
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.