Capital Gains Exclusion - Children on Deed

[Julie Christiansen]

Hi All -

I have a primary residence and am considering adding my two sons in college to the deed of my house. I am single. We all use it as a primary residence. I plan to sell in two years and have us all get the 250k exclusion from capital gains. The residence has appreciated more than 750k. My questions are: Can I still claim them as dependents? I see nothing in the tax code preventing this. Also, this seems to be a great strategy to add any or all children (even very young ones) to your deed as owners or co-purchase the residence with them if you live in high appreciation areas, because you can exclude 250k per individual when you sell (without a limit). If you are married and filing jointly are you limited to 500k even if your children are on the deed as owners with you? I understand that you have to do a gift tax return when adding them to the deed if you already own the house, but there would be no tax due, as it just goes against the life time gift exemption. You would avoid this if you add them to the deed when you purchase the house.

If this works, I think it's an incredible opportunity that does not seem to be discussed at all.   Maybe just a win for us single parents, but if so, I would like to help get the word out!

Thanks!

Julie