Thank you NCperson. My wife was gifted the home by her mom. Her mom went into a nursing home prior to gifting. Instead of requiring that her home be sold to finance the nursing home, Medicaid allowed her to gift the home to my wife, because my wife was her caregiver & lived with her for 2 years or longer. (I lived there, as well.) “Caregiver child exclusion” was applied. My wife is selling the home after living in it for over 2 years, but after owning it for only 1 year. Can the $500K cap gain exclusion be applied against the $300K cap gain that will be realized upon sale (even though ownership is less than 2 years)?
