Can I qualify for the exclusion of gain from the sale of a residence if my parents live there?

August 10, 2011

From:  Alexia
Date:  18 Oct 2010

My parents are living in a residence owned by me. I pay everything for the house, but I have never lived there. I want to sell the home. Can the gain qualify for the exclusion for gain from the sale of a residence?

Answer

Date:  8 Nov 2010

Hello Alexia,

No. The residence must have been your principal residence. You don't "get credit" for your parents' use of the home for this test. (Internal Revenue Code Section 121(a).)

The only exception is you get to count use by a former spouse for a residence received as part of a property division in a divorce or used by a former spouse pursuant to a divorce decree. (Internal Revenue Code Section 121(d)(3).)

Good luck!
Mike Gray

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