Delayed sale of a joint home
I bought a home with someone to whom I was NOT married. I lived there for a few years. Then I moved out, and at that time I agreed to postpone a sale, as he was not ready to move out and couldn't afford to buy me out. I bought by own house with a mortgage. Eight years after I moved out, he finally agreed to sell. I was then able to pay off my mortgage in my primary residence. I had not lived in the first house for eight years. Is there anything I can deduct, whatever, or does all of my share from the sale of the first house count as capital gains?
Answers
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Hi Finally,
The IRS has two rules to gauge whether the sale of the home must report capital gains or qualify for the exclusion.
- Did you own the home for at least two out of the last five years. Ownership test.
- Did you live in the home for two year out of the last five year. Use test.
You pass the ownership test, but since you did not live in the home for two years out of the last 5 years, you do not pass the Use test and must report the sale on your return and pay capital gains.
