"rick++" <rick303[at]hotmail.com> wrote:

- quote -

The only way to guarantee not paying income tax on the sale
of a house (if you don't get to exclude all income under
section 121) is to die while you are still the owner - but
not in 2010!

Stu

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Some poeple will do *anything* to avoid paying
tax on a house :-)

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Larry Bayley wrote:

- quote -


From IR-2002-142, Dec. 23, 2002;

A sale will be considered as occurring primarily because of
"unforeseen circumstances" if any of these events occur
during the taxpayer's period of use and ownership of the
residence:

* death,
* divorce or legal separation,
* becoming eligible for unemployment compensation,
* a change in employment that leaves the taxpayer unable
to pay the mortgage or reasonable basic living expenses,
* multiple births resulting from the same pregnancy,
* damage to the residence resulting from a natural or
man-made disaster, or an act of war or terrorism, and
* condemnation, seizure or other involuntary conversion
of the property.

Any of the first five situations listed must involve the
taxpayer, spouse, co-owner, or a member of the taxpayer's
household to qualify. The regulations also give the IRS
Commissioner the discretion to determine other circumstances
as unforeseen.

For qualifying sellers, the maximum exclusion amount of
$250,000 ($500,000 for a married couple filing jointly) is
limited to the percentage of the two years that the person
fulfilled the requirements. Thus, a qualifying seller who
owns and occupies a home for one year (half of two years) –
and who has not excluded gain on another home in that time –
may exclude half the regular maximum amount, or up to
$125,000 of gain ($250,000 for most joint returns). The
proportion may be figured in days or months.

So, when pro-rated, I believe they will owe no tax at all.
And your daughter's new purchase is a non-issue for this
situation. JOE

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"Larry Bayley" <llbayley[at]charter.net> wrote:

- quote -

Short term gains.

- quote -

Not relevant.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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My daughter and son-in-law bought a house last November.
They are now in the process of a divorce and the house is up
for sale. They got a pretty good deal on the house when
they purchased it and stand to make about $70,000 after the
sale.

My question is what kind of capital gains tax will they be
liable for? She is going to be buying another house after
the divorce with her share of the profit from the sale of
the house.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >