Home sale exclusion

Forum|Forum|3 years ago
February 11, 2023
6 replies
60 views

Does the following situation qualify taxpayer for Ownership eligibility for the HO exclusion......

Client's son/daughter-in-law rented a house for 1 year then purchased house from landlord. One year after purchasing they sold the home. Son/d-in-law's tax preparer says the year of renting counts towards the required two out of five for ownership.

My client is concerned because he does not think this correct. I do not think this correct but I've been known to be wrong on an occasion or two (or three or four........etc etc) It meets the eligibility test for Residency not ownership. Both tests must be met not just one.

Thanks for the help.

ProSeries Professional

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IRonMaN

Level 15

For what it's worth, I've been wrong more than that, but I think that tax preparer is full of crap.

Slava Ukraini!

abctax55

Level 15

Rent doesn't convey ownership. So I say nope.

Was there a lease option? That doesn't transfer title (or ownership) but maybe, just maybe that other preparer is trying to use that as a rationale?

HumanKind... Be Both

dkhAuthor

Level 15

I don't think so but I'll ask my client.

abctax55

Level 15

Doesn't matter, IMHO.... it doesn't change the situation. I was just trying to 'read that preparer's mind' cuz it is Sat. afternoon & I'm bored with the work on my desk 🙂

HumanKind... Be Both

T

TaxGuyBill

Level 15

The definitely don't meet the two-year ownership requirement, but it is possible they moved for a qualifying reason in which case they could qualify for a Reduced Maximum Exclusion.

G

garman22

Intuit Community Champion

I also concur.....I say no on ownership.

T

taxes96786

Level 8

Did you research the instructions in Pub 17 or sale of home? It is clearly stated there.

abctax55

Level 15

Laura, the OP is a pro who has posted here often; he was asking for some back up for his position because another preparer expressed a different one. The OP stated he disagreed.

Telling him to read the directions/Pub 17 isn't helpful. It's rude.

HumanKind... Be Both