Quote from @Account Closed:
Quote from @River Ayton:
TAX QUESTION!
I am partnering with an individual to do a live in flip. I would live in the house for at least 2 years (to avoid capital gains tax) before selling. My partner would not be living in the house. Will he also avoid capital gains tax?
Hey River,
Sounds like you are referring to the section 121 exclusion. For this to work you need to have lived in the home for at least 24 months out of the last 5 years of owning the home from the date of sale. Please note if your active military the timeline is a bit longer.
As for your partner, they need to also have passed the "use test" of 24 months out of 5 years above. Both of you are limited to 250k of tax free gains, assuming you haven't done a 121 exclusion deal in the past two years. I am assuming when you say partner its business partner and not married :)
Thank you Zachary! You are correct, business partner, not life partner haha. So, my understanding of what you just said is that in order for him to also reap the benefits of the 121 exclusion, like I would be, he would also need to live in the residence for 2 out of the last 5 years correct? He cannot benefit from only myself fulfilling the section 121 requirements.
