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Investors & landlords
Qualifying for the Exclusion (https://www.irs.gov/taxtopics/tc701)
In general, to qualify for the Section 121 exclusion, you must meet both the ownership test and the use test. You're eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale. You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale. Generally, you're not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home. Refer to Publication 523 for the complete eligibility requirements, limitations on the exclusion amount, and exceptions to the two-year rule.
NOTE Again: The house must be treated as investment property (forgetting this argument about whether or not his partial and incomplete use or not of the house even applies) and should have been depreciated over the time of ownership when the father occupied the house and thereafter until the time of the sale. Failure to report the depreciation does not eliminate the required accounting for the depreciation which must be used to discount the cost basis upon the sale.
NOT INTUIT EMPLOYEE
USAR 64-67 AIS/ASA MOS 9301 - O3
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