The non resident owner would get to deduct the interest
payments made towards the mortgage, correct?

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If the two people were never spouses then only the one who
lives in the house can use the section 121 exclusion. If it
is a divorced couple who owned the house during marriage and
continue to do so then the spouse who does not reside in the
house can count the days of use of the other spouse and use
the exclusion.

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s_jenz[at]hotmail.com (Steve) wrote:

- quote -

Unless each owner both OWNS and RESIDES in the house for the
required 2 of 5 year period, only the resident gets an
EXCLUSION of tax on the capital gain. The non-resident owner
owes capital gains tax.

If you gift more than $11,000 to any individual in a given
year, you will be required to file Form 709, to report the
taxable gift. A gift is not taxable income to the giftee,
nor a deduction to the giftor.

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s_jenz[at]hotmail.com (Steve) writes:

- quote -

No.

- quote -

That sounds like a different question. If the nonresident
owner moved into and used the property as a principal
residence for 2 years before sale, then (s)he'd meet both
the use and ownership requirements. Thus, it would be
possible for the one who's been living there to move, the
other move in for 2 years, and then both would meet the use
and ownership tests.

- quote -

Normal gift tax rules would apply if you're talking about
one seller somehow compensating the other for the tax
liability or a portion of it. If you're talking about
having the one who meets the use test pretend that (s)he's
the only owner and then slide the other owner's share under
the table, see "Fraud."

Phil Marti
Topeka, KS

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s_jenz[at]hotmail.com (Steve) writes:

- quote -

In any case, each individual must qualify on their own merit.
If you were to gift your share to the qualifying person that
portion would not qualify for the exclusion.

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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I'm wondering if anyone can answer this question. If two
individuals (relatives, divorcees, etc) have ownership in a
house and only one lives in the home, does the non resident
get the tax benefits of residency? (would they get tax free
capital gains after 2 yrs of residence?, etc...).

What does the tax code say about gifting ownership, or a
portion of the proceeds of a zero capital gains sale?

Thanks for anyone who can help.

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