My uncle and I are unmarried co-owner on title. My uncle satisfies the two-out-of-five-year ownership and use tests. I didn't met the residence test since I lived in another state. We sold the house last year and got a capital gain of $350,000. (The cost basis was $150,000 and sale price was $500,000). Then, my uncle bought another smaller house for $280,000 within 6 months from the gain and his savings. Should we split the sale price in half and file tax even though there is no paper agreement for the split responsibility. I assume I will pay more tax then his?
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Yes, you should split the sale price.
Your Uncle would receive an exclusion on his portion of the gain, $250,000 or $500,000 depending on his filing status.
You would not receive an exclusion since it is not your home.
His purchase of another home does not enter into the calculation.
Thank you so much for the clarification Robert! I will proceed my tax filing.
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