Tax Guru – Ker$tetter Letter

Q:

Subject: Exchange Question

 

Hello,

 

I’m actually curious about guidelines in Oregon.  My parents use their home as a primary residence and as their place of business.  They have lived in the home for one year and now have some changes that may require them to sell it and relocate.  (My father was just diagnosed with depression.)  I am wondering if they would be able to sell it and not pay capital gain taxes for either of those reasons: using it for business or the health diagnosis.

 

Thank you so much!  Your website has been incredibly helpful.   

A:

Using the home for business won’t allow a tax free sale.

The medical condition, if unforeseen when the home was purchased,  would allow them to use the pro-rated exclusion of  $714.28 profit per day the home was owned and used as a primary residence.

I have this all explained on my website.

Your parents should definitely consult with their personal professional tax advisor to both calculate the actual potential gain and verify whether they would qualify for the pro-rated exclusion.

Good luck.  I hope this helps.

Kerry Kerstetter