REAL ESTATES FORUM

Im a little unclear regarding exclusion allowable for gain on sales of main
home, and hoping you can help me answer some of the questions below.

My parents are in the process of selling their main home, and they would be
qualified to exclude their gain up to $250K each for the sales based on the
ownership and use tests. However, they will not buying another home.

1) Will they still be eligible to exclude the gain with no plan of
buying a different home to live in?

2) What is the 3 years period regarding whether to exclude your gain
or not?

3) Once you claimed the exclusion, is there any reason you would be
required to pay taxes on that gain at a later time?

2) What is the different between this exclusion vs. gain
postponement?

Thank you very much for all your help.

On 16/4/04 16:09, in article zGSfc.670$L31.382@nwrddc01.gnilink.net, Howdy
wrote:


Yes. Dont be confused by old sec. 121. No need to buy a new one.


I dont understand this question. There is no option involved: you are
either eligible to exclude or not. See Pub 523 and the other references I
included in another reply.
http://www.irs.gov/publications/p523/index.html
http://www.irs.gov/taxtopics/tc701.html
(There are various special rules for overseas workers, USG employees and
military, etc. I dont imagine you are referring to those.)


Not if you were entitled to the exclusion in the first place. But I could
hypothesize: say you were not an owner, but rather the spouse of the owner,
so you took $500,000 exemption as a couple. Then it was found that the
marriage was invalid because your spouse was a bigamist. After the 3- or
6-year limitation (in the absence of out-and-out fraud) the IRS is SOL
though.


A sec. 1031 tax-free exchange is for income producing property. Sec. 121 is
for a main residence.