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My handicapped sister, 55, has been living at the family home alone for six years now. Title for the home is in the Trust our parents set up before they passed away. I am the trustee. My sister must move to an assisted living facility and we plan to sell the house. Can we qualify for the over-55 tax treatment?
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Your sister's trust owned house does not qualify for over 55 exemption, that part of the IRCode was replaced over 12 years ago. Under the new law if an individual has lived in and owned a house for 2 of last 5 years, they may exclude up to $250,000 individual/$500,000 couple MFJ. Unfortunately, an irrevocable trust would not qualify, so the bulk of the gain would be taxed at 15%. Be happy it's 2008, very small part taxed at 0%. After 2010, if democrats win, top cap gains rate back to 20% or more.
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Thanks. Had a deep, abiding suspicion that I was on the wrong side of the tax law. I will be able to deduct some recent capital improvements, I guess, and then suck up the rest at 15%. Go Republicans!
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