Regulations finalized in late 2002 address the eligibility of vacant land for the exclusion. In addition, the taxpayer must not have used the gain exclusion during the immediately preceding two years before the sale. Also, the taxpayer must have occupied and used the home as the taxpayer’s principal residence for at least two years (in the aggregate) of the five years preceding the sale date. §121 exclusion, the taxpayer must have owned the residence for at least two years or more (in the aggregate) during the five years immediately preceding the sale date. In addition, the provision only applies to the taxpayer’s “principal residence.” But, what if the residence is sold with the farm? In that event, how much (if any) of the farmland and outbuildings can be included with the residence under the provision? Also, what if the taxpayer uses a part of the residence for business? How does that impact the exclusion? What if the farm and residence are sold on an installment basis and the buyer defaults and the seller gets the property back? What then? These issues are the focus of today’s blog post. The taxpayer has to meet certain requirements. Of course, the IRS just doesn’t give the exclusion away. It’s one-half of that amount for single filers. The maximum exclusion is $500,000 for taxpayers that are married and file jointly. Section 121 of the Internal Revenue Code provides for the exclusion of gain that is attributable to the sale of the taxpayer’s principal residence.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |