Sale of Home owned by multiple buyers

[LV44]

3 unrelated people purchase a home and all 3 are on the deed and mortgage.  If the home sells and has a total gain of about $40,000, do the owners evenly report the gain?  For 2 of the owners this is their primary residence but for one of the owners it is a second residence.  All 3 owners lived in the home for more than 2 years.  

[KNDavis]

Hi LV44,

When a home owned by three unrelated individuals is sold, each owner reports the sale in the proportion of their ownership.  Assuming they own the house with joint tenancy, meaning all owners have equal rights, each person would report 1/3 of the gain.  Since the home is the primary residence for some of the co-owners, those individuals may be able to exclude up to $250K of the gain from taxable income if they meet the other requirements for gain exclusion. 

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Kimberly, CPA for over 30 years