Principle Residence


B

bubba

When I graduated from college, my father gave me three acres
of wooded land. I bought a mobile home, put on the land,
and lived there for the last 9 years until 6 months ago when
I moved in to my now wife's condo.

We sold the trailer to a junk yard and are in the process of
building a house where the trailer was. My wife is acting
as the general contractor. The house will cost us $125,000
and she thinks we can sell it and the acre it is sitting on
for $400,000. We have already sold another acre for
$120,000. After the house is sold we will build a house for
us on the remaining acre.

I am declaring a capital gain for 2003 on the acre we sold.
Now
a) if and when we sell the new house, can I declare it as
my principle residence?
b) If yes, is it subject to a $250,000 or a $500,000
exclusion?
c) What about the sale of my wife's condo? She has lived
there for the last five years?
 
Ad

Advertisements

P

Paul A Thomas

a) if and when we sell the new house, can I declare it as
my principle residence?
Only if you lived there.
b) If yes, is it subject to a $250,000 or a $500,000
exclusion?
For greater than 2 years.
c) What about the sale of my wife's condo? She has lived
there for the last five years?
Then there would be a gain exclusion of up-to $250,000 for
her, and I believe some additional prorated amount for your
partial time there (you do live there now, right?).
 
Ad

Advertisements

D

D. Stussy

When I graduated from college, my father gave me three acres
of wooded land. I bought a mobile home, put on the land,
and lived there for the last 9 years until 6 months ago when
I moved in to my now wife's condo.

We sold the trailer to a junk yard and are in the process of
building a house where the trailer was. My wife is acting
as the general contractor. The house will cost us $125,000
and she thinks we can sell it and the acre it is sitting on
for $400,000. We have already sold another acre for
$120,000. After the house is sold we will build a house for
us on the remaining acre.

I am declaring a capital gain for 2003 on the acre we sold.
That's your choice. Note that the exclusion can apply to
this transaction also, but then it lowers the amount
available in the subsequent transaction. You might want to
consider taking it if you blow the 2-of-5 year rule later.
Now
a) if and when we sell the new house, can I declare it as
my principle residence?
See above. The land itself clearly qualifies.
b) If yes, is it subject to a $250,000 or a $500,000
exclusion?
Since only YOU lived there, it's $250k.
c) What about the sale of my wife's condo? She has lived
there for the last five years?
ONLY she gets an exclusion for that (at this time, as you
haven't been there 2 years yet) of $250k.
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top