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Allocation of proceeds from home sale 1099-S / tax exemption question
I co-own a home with my father who I trust completely for this scenario, and we are selling the home due to financial burden.
My father has lived in the home for 2+ of the last 5 years. I have also lived in the home (NJ), but I work in another state (CT), have an apartment in the other state, and I have been going back and forth between the two places. I have documents with both addresses. I did file a NJ resident return for 2023, but then I got married in 2024 and my spouse has been living in CT so we decided to file joint CT resident return even though I lived in NJ for part of the year (this seemed the easier option at the time).
I have personally considered the home in NJ to be my primary residence since we moved in, and so I was always hoping to qualify for the tax exemption. But now I am worried that I may not qualify for the exemption especially since I only have one year of NJ resident return.
I am now wondering if it would be possible and advisable to designate 99% of the proceeds to my father, who I know definitely qualifies for the exemption, and 1% to me. It would need to reflect this on the 1099-S for this to even be worth it. My father is the one who put in ALL the money for the down payment and home improvements so it is reasonable that he receive most of the proceeds, and I was originally going to "gift" him a good portion of my money anyways.