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Discussion Forum Index --> Advanced Tax Questions --> 121 Exclusion for Tenants in Common
Discussion Forum Index --> Tax Questions --> 121 Exclusion for Tenants in Common
Nittiaj (talk|edits) said:
| 29 January 2009
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| I'm trying to make sure I interpret the 121 regs correctly. A owns 65% of a residence and B owns the remaining 35%. They file separate returns and are unmarried. They both live there and otherwise meet the requirements of Section 121. They sell the home for a gain of $500,000. Does B get a $250,000 exlusion even though he only owns 35%, or is his exclusion limited to $175,000? Logic would dictate the latter, but I think the regs provide for a $250K exclusion for any joint taxpayers that file separate returns.
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Kevinh5 (talk|edits) said:
| 29 January 2009
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| I think you follow the money trail. If A gets 65% of the profit, he would only exclude up to $250k.
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Nittiaj (talk|edits) said:
| 29 January 2009
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| Thanks, bur what about b? Is he limited to 35 percent of the 500k exclusion if the gain is say 100000? Or does he get a full 250000 exclusion?
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Kevinh5 (talk|edits) said:
| 29 January 2009
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| B has a gain of 35% of $500,000 , which is 175,000. All of it is under her $250k ยง121 limit.
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Nittiaj (talk|edits) said:
| 29 January 2009
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| I agree with this. Even though B only owns 35% of the property, she is entitled to a full $250,000 exclusion, and her exclusion is not limited to 35% of $500,000.
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Kevinh5 (talk|edits) said:
| 29 January 2009
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| that is not what I wrote. Her exclusion is limited to her gain.
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Nittiaj (talk|edits) said:
| 29 January 2009
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| no, no. I agree with you. I know it's limited to the gain, what I'm saying is if her share of the gain HAD been $250,000, she would have been able to exclude all of it, even though she only owned 35% of the home. Her exclusion, under the regulations, is still $250,000 as a 35% owner, NOT 35% * $500,000.
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Riley2 (talk|edits) said:
| 29 January 2009
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| Right, the $250,000 excluson is per taxpayer, not per dwelling unit.
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