Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Assuming someone else’s Sec. 121 eligibililty?

Posted by taxguru on April 3, 2008

Q:

 Subject: 1031 question

 Hello,
 I know you deal in the 1031 exchange field and I also know from reading your blog your deal with tax issues in a liberal reading. So I feel you are a good person to get an open minded view from.Is there a way to use someone else’s 2 out of 5 years? Drew Miles, Tax Attorney claims there is a way/program to do this. Is this something you have heard about? Can you guide me to some references.
Thanks,

 

A:

The only way I am aware of for one person to benefit from someone else’s time in a home in terms of qualifying for the $500,000 tax free exclusion, is with spouses.  IRS allows the full exclusion if either spouse owns the home for at least two out of the previous five years. However, they require both spouses to use the home as their primary residence in order to exclude the full $500,000.  Shorter times as a residence by each spouse would require prorated adjustments in the excludable gain.

In regard to being able to walk in and assume the tax benefits of an unrelated person’s use of a home as if they were yours, I don’t see how that is possible.

I checked Drew Miles’ various websites and see nothing other than his vague promises of tax savings secrets, with no mention of this issue.  I would be interested in seeing what you are referring to before concluding that you are misreading it.

Kerry Kerstetter

 

 

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