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Daughter Is Selling |
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Ms. Lank: My daughter and her husband who are both 35 will be selling the house they lived in for the past six years for a profit. They will relocate to another state and purchase a house for much more money. Will they be exempt from paying income taxes on the profit? I thought I knew the answer to this until a friend told me that you have to be 55 years old to claim tax exemption. Is this correct? Also, is a form 1099 issued at the time of sale? |
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Your friend was thinking of some old rules, no longer in effect. Today it doesn't matter how old a homeseller is, or whether any replacement residence is purchased. Your kids have owned and occupied the home more than long enough to meet the requirements, so they can take up to $500,000 profit free of federal capital gains tax. At the closing, they should sign a statement that the sale qualifies for the homesellers exclusion and no tax is due. Then no 1099 will be sent to the IRS or to them |
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Edith
Originally published on January 1, 2005 |
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