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Home Exclusion

sanperky1
Level 1

Taxpayer lived in her home for 50 years.  The last 7 years she was in a nursing home with dementia but still maintain her family home.  

Does this qualify her for the home exclusion?

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2 Replies 2
George4Tacks
Level 15

IRC 121(d) (7)

(7)Determination of use during periods of out-of-residence care

                In the case of a taxpayer who— 

                (A) becomes physically or mentally incapable of self-care, and
 
                (B) owns property and uses such property as the taxpayer’s principal residence during the 5-year period described in subsection (a) for periods aggregating at least 1 year, 
 
then the taxpayer shall be treated as using such property as the taxpayer’s principal residence during any time during such 5-year period in which the taxpayer owns the property and resides in any facility (including a nursing home) licensed by a State or political subdivision to care for an individual in the taxpayer’s condition.
 
If you become physically or mentally unable to care for yourself, and you use the residence as your principal residence for 12 months in the 5 years preceding the sale or exchange, any time you spent living in a care facility (such as a nursing home) counts toward your 2-year residence requirement, so long as the facility has a license from a state or other political entity to care for people with your condition.

ex-AllStar
PATAX
Level 11

@George4Tacks thanks for the information and the links... 👍