There is an exclusion available if she meet the qualifications. Even if she does not live there the required amount of time, there is a way to still exclude a portion based on the time she lived there.
Does
Your Home Sale Qualify for Maximum Exclusion
The tax code recognizes the importance
of home ownership by providing certain tax breaks when you sell your home. To
qualify for these breaks, your home must meet the Eligibility Test , which is explained later.
The type of home involved is
less important. A single-family home, condominium, cooperative apartment,
mobile home, or houseboat can all count as a home.
How your sale qualifies. Your
sale qualifies for exclusion of $250,000 gain ($500,000 if married filing
jointly) if all of the following requirements are met.
- You owned the home and used it as your main home during
at least 2 of the last 5 years before the date of sale.
- You didn’t acquire the home through a like-kind
exchange (also known as a 1031 exchange), during the past 5 years.
- You didn’t claim any exclusion for the sale of a home
that occurred during a 2-year period ending on the date of the sale of the
home, the gain from which you now want to exclude.
Partial Exclusion
May Be Available
If you don't meet
the eligibility test, you may still qualify for a partial exclusion of gain if
you moved because of work, health, or an unforeseeable event. You can qualify
either by meeting a set of standard requirements (the “safe harbor” provisions)
or by showing enough facts and circumstances to validate your claim.
Health-related move.
You meet the
standard requirements if any of the following happened during the time you
owned and lived in the home you sold.
You moved to obtain,
provide, or facilitate diagnosis, cure, mitigation, or treatment of disease,
illness, or injury for yourself or a family member.
