Selling grandma's house to pay for care. She has been in a nursing home for 6 years. When we sell the house will she have to pay Capital Gains tax or will she be exempt?

Forum|Forum|7 years ago
June 5, 2019
2 replies
2 views

House was not rented. Her son lived there for a time and just paid the utilities used. No income was generated from his stay.

TurboTax Basic Windows

SweetieJean

Alumni - Champ

Are you (or anyone else) a co-owner? Or do you have her Power of Attorney?

PattiLacuesta

Level 2

not a co-owner. Power of attorney only.

Hal_Al

Level 15

She will be exempt, on up to $250,000 in capital gains. Even though she has been in a nursing home, the house is still her principal residence for the purposes of the home sale exclusion.

Reference: https://www.irs.gov/publications/p17/ch15.html; which says "Under this exception, you are considered to live in your home during any time within the 5-year period that you own the home and live in a facility (including a nursing home) licensed by a state or political subdivision to care for persons in your condition"

Carl

Level 11

So when the program asks if the owner listed on the deed prior to the sale lived in the home for at least 24 of the last 60 months prior to the closing date of the sale, simply select YES and press on. This of course, is assuming grandma is the ONLY owner listed on the deed prior to the sale.