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Discussion:Qualified Individual?

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Discussion Forum Index --> Tax Questions --> Qualified Individual?

BRUCEB (talk|edits) said:

22 June 2006
I have a taxpayer that owns her primary residence and a residence that her elderly mother lives in, but the mother can no longer climb stairs so she is selling that house and moving the Mother to an apartment. Taxpayer has owned this house for 15 years of which she lived there for 5 years then moved mother in. Taxpayer always claimed interest and taxes on schedule A even though Mother has helped make mtg. payments. I believe that the taxpayer is entitled to receive the $250,000 exemption on the sale of the property, but I cannot find backup. In the Master Tax they claim under a "safe harbor rule" that the mother is a "qualified individual" as for medical purposes. The taxpayer does not claim the Mother as an exemption. If anyone has been down this road before I would appreciate hearing from you.BRUCEB 14:54, 22 June 2006 (CDT)

Warren (talk|edits) said:

23 June 2006
I would say that she is not entitled to the Section 121 exclusion. She has not owned and lived in the house as her principal residence for two of the last five years. She can't have two principal residences simultaneously. The fact that she claimed interest and taxes on schedule A doesn't add any support to Section 121 exclusion argument since vacation home interest and taxes are also claimed on Schedule A but vacation home doesn't qualify for Section 121. I don't know of any exceptions to Section 121 that would allow her to claim the exclusion.

Bean (talk|edits) said:

25 June 2006
Not clear to me whether TP has lived there for 2 of the last 5 years. BruceB stated "for 5 years" - was it the last 5 years as of date of sale?

Michaelstar (talk|edits) said:

25 June 2006
Until BruceB adds more info to this post, I fully agree with Warren.

LJACPA (talk|edits) said:

26 June 2006
Should not the daughter have reported rental income from the payments received from her mother? It seems like she got the benefit of the deductions without the income/offset being reported (and depreciation as well).

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