michael.bratt[at]wdn.com posted:

- quote -

That would be my calculation. Those were, indeed, all _her
costs.

- quote -

Interesting question. IMO, her ownership and her residence
clearly qualify her (Lived in and "owned" the residence as
her main home for at least two of the last five years).

Bill

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About 1990 - Two single women bought a house together;
shared the cost and expenses and all deductions (mortgage
interest and prop taxes) 50/50.

About 1996 - One woman moves out to get married. Joint
ownership continues with a resident owner and an absentee
owner. Resident owner continues to claim deductions for
half the mortgage interest and half the prop taxes.
Absentee owner treats her half as rental property;
collecting fair market rent (for half a house) and claiming
all the usual deductions.

Late 2002 - Absentee owner sells her half to the resident
owner at the 2002 FMV for half the house. Resident owner
now owns 100% of the property and takes all the deductions
available to her.

2004 - Owner is selling the house. (For next year's tax
return What is the basis? Her share of 1990 purchase +
closing costs PLUS the 2002 purchase + closing costs +
improvements? Is her ability to shelter $250,000 from
capital gains in jeopardy with the 2002 purchase and the
2004 sale or does the original 1990 purchase govern?

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