2005:2 Sisters co-purchased SFH for $150. 2007:1 moves out; 1 stays(never rented). 2019:pending sale $450. Can live in exclude $250 CG? Legal to gift $10 to each nephew?

[jdwldw]

"In 2005, Two Sisters, Donna and Suzy, purchases a SFH primary residence for $150. Donna married James in 2007 and moved out and Suzy continued to live there and never rented out. In 2019, the house anticipates being sold for $450. (assume zero for simplicity in capital improvements - therefore $300 in CG) Can Suzy exclude $250 of the capital gains since she lived there and Donna and James declare $50 CG on their taxes? Can Donna gift $10 to 3 nephews at the closing with a check written to each 3 nephew names to reduce Donna's capital gains?"

[DoninGA]

Is this a homework question?

[jdwldw]

Thank you for viewing; Not a homework assignment! This is a true pending sale of a co-purchased SFH primary residence (never rented) with at least $300 in capital gains; lived in only by my sister in law and and not by my wife in the last 11 years. I was hoping to at least reduce the capital gains taxes. I am happy property appreciated so much....it is a row home in DC! But there is more to the story why selling now and any extra money needed.  

[Coleen3 · Accepted solution]

1) Suzy has a $75k basis, not 150k. Donna has a 75k basis.

2) Suzy has a $250k exclusion. Donna has none.

3) Sales price is divided in half between owners. $225k each.

4) You can make a gift to your nephews but it is not deductible. It changes nothing in regard to the house.