Absentee co-owner loses out on real estate tax break

DEAR BOB: My daughter and I own a house as joint tenants. She has lived in the house for the last two years. I have never lived there. We plan to sell it and expect a net profit around $100,000. Can the entire profit be allocated to her so it will be exempt from capital gains tax? --Arnie C.

DEAR ARNIE: Yes. If your daughter owned and occupied her principal residence at least 24 of the 60 months before its sale, Internal Revenue Code 121 entitles her to claim up to $250,000 tax-free home-sale profits. Thankfully, this includes the entire $100,000 expected sale profit so no capital gains tax will be due on the sale. For more details, please consult your tax adviser.

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Copyright 2006 Inman News