My father sold his home this year. he’s been living with me since October of 2022. I plan to claim him as a dependent for 2023. How do we handle the sale of his home?

[RyanH5]

The sale of your fathers home may not need to be reported if your father meets all of the exclusion tests for the gain on the sale of his home, and he did not receive a 1099-S. (If he received a 1099-S, the sale must be reported, but he may still claim the exclusion if he qualifies.)
The exclusion tests are:

• Gain on the home (Sales price less adjusted basis) is less than $250,000 ($500,000 if married filing jointly)
• Has lived in and owned the home for at least 24 of the 60 months preceding the sale (does not need to be continuous)
• Has not claimed a home sale exclusion in the past 2 years
• Did not acquire the home in a like kind exchange

So long as all of these requirements are met and he did not receive a 1099-S, your father is not required to claim the sale on his tax return. However, I do advise claiming it anyway in order to establish that he is in fact taking the exclusion.

Any amount of gain that does not qualify for the exclusion will be taxed as a capital gain.

[MarianneK]

Hello winteronjupiter, 

Thank you for your question.   

So you will be claiming your father on your TY 23 return and he sold his house?   

First review this article to make sure your father qualifies as your dependent.   Steps to Claiming and Elderly Parent as a Dependent 

Assuming he does qualify as your dependent, your father will need to file a TY 2023 tax return and not claim himself.   He will enter his income and the sale of the house on the tax return.   He will get the standard deduction for filing as Single.   Assuming that he meets the criteria for the sale of the home, there should not be any tax on the sale of the house.   

Here is an article that explains the sale of home exclusion.   Tax Aspects of Home Ownership: Selling a Home 

[Mike9241]

if he's the sole owner of the home he will have to file his own return to report this.   as to whether you can claim him as a dependent there are three tests of which one is met because he is your farther. the other two:

To qualify as a dependent for tax purposes, a person's gross income for the year must be less than $4,700 for the 2023 tax year. Gross income includes all taxable income including any taxable gain from the house sale Before any exclusion) . other rules affect what's included in taxable income.  You must provide more than half of the person's total support for the year.

from 1040 instructions

**Gross income means all income you received in the form of money, goods, property, and services that isn't exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Don’t include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2022, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). If (a) or (b) applies, see the instructions for lines 6a and 6b to figure the taxable part of social security benefits you must include in gross income. Gross income includes gains, but not losses, reported on Form 8949 or Schedule D. Gross income from a business means, for example, the amount on Schedule C, line 7, or Schedule F, line 9. But, in figuring gross income, don’t reduce your income by any losses, including any loss on Schedule C, line 7, or Schedule F, line 9.