Qualified for look back exemption for sale of a home

[xmasbaby0]

What do you mean by a "look back exemption?"  

If your gain was more than  $250,000 filing Single, or more than $500,000 filing Married Filing Jointly the sale must be reported on your tax return.  Whether you re-invested the gain in to another house is irrelevant.  If you  have a Form 1099-S go to Federal>Wages and Income>Less Common Income>Sale of Home (gain or loss)

If you owned and lived in the home as your primary residence for at least 2 of the last 5 years on the date of the sale, you do not have to report the home sale if the gain is less than $250K filing Single, or less than $500K filing Married Filing Jointly (and you both owned and lived in the home for at least 2 years).

• If you are using online TT, you need Premium software to report the 1099-S

NOTE:   If you have ever used the home as rental property or claimed a home office, you have more information to enter

[rhrose]

Some context and facts related to my question:

• The home I sold is my parents house but ownership was transferred to me sometime in 2015 with my parent’s retaining lifetime rights.
• my last surviving parent died in August 2023.
• my brother lived in the home, rent free, from August 2023 until January 2024.
• I sold my primary residence in June 2022.
• I lived in an RV from June 2022 until February 2024, when I moved into my parents house.
• I was building a house over 100 miles away while I lived in my parents house.
• When my new house was finished, I sold my parents home (in December 2024) and moved into my new house.

My question is do I need to pay capital gains tax on the sale of my parent’s house? I only lived in the house 10 months as my primary residence. Does my last surviving parent’s death qualify as a special circumstance as outlined in the IRS quidelines?

[xmasbaby0]

Sorry----way too many twists and turns in this narrative for me to sort out.   Someone else may have some thoughts.   Or you might need a local tax pro.

@Mike9241       @Opus 17    @Anonymous_ 

[Opus 17]

You don't qualify for the capital gains exemption for sale of a personal home.   You didn't live there 2 years and you aren't selling early due to an unforeseeable circumstance.  However, you probably have a stepped up basis equal to the fair market value on the date of your last parent's death (August 2023).  So your capital gains will be based on the gain since August 2023, not 2015 or earlier.   It depends on exactly what is meant by "retaining lifetime rights" and you may want to discuss it with a tax professional.