Terry53029
Level 14
Level 14

Your client is a joint owner with 50% interest in home. The parents are 50% owners, and will treat the sale as an investment. If your client (son) meets test for exclusion, he will use 50% of gain for the exclusion. Who took deductions on tax return in past years has no effect. I don't know any regulation that covers this, but perhaps some one will respond that does.