Capital Gains - Health Related Move

[Anonymous]

My parents are moving from their home to a retirement community. One of the main reasons is my Dad’s Parkinson’s and wanting to be in a one floor home. They will have over $500,000 in capital gains from the sale of their home. In reading through IRS documentation it seems there is a Health Related Move exclusion. Anyone have experience using this to move from a primary residence to retirement community? As we believe many people making this move would be able to use some sort of medical diagnosis, we are curious if it counts. And because my Dad won’t trust anonymous feedback from DCUM, any places other than IRS website to read up on this?

[Anonymous]

Here is the IRS information on the sale of your primary residence. As long as they owned the house and lived in the house for 2 years they can exclude up to $500,000 (if filing jointly) of capital gains to the sale of the primary residence.

https://www.irs.gov/taxtopics/tc701

[Anonymous]

Anonymous wrote:Here is the IRS information on the sale of your primary residence. As long as they owned the house and lived in the house for 2 years they can exclude up to $500,000 (if filing jointly) of capital gains to the sale of the primary residence.

https://www.irs.gov/taxtopics/tc701

Yes, OP knows this. OP is asking about an additional exclusion for a health related move.

[Anonymous]

Read Publication 523. I think the exemption you are referring to relates to a health issue before you have lived i your house for 2 years...not just that you are overall exemption if you move for health reasons.

https://www.irs.gov/publications/p523

[Anonymous]

You might try this on the Personal Finance forum at Bogleheads.

https://www.bogleheads.org/forum/viewforum.php?f=2

[Anonymous]

As long as it’s their primary residence and they haven’t taken the exclusion recently then they can exclude $500k from their federal income
Taxes? If you are talking about another $500k on top of that then is it really that bad to pay $100k in taxes on $1m?

[Anonymous]

Anonymous wrote:As long as it’s their primary residence and they haven’t taken the exclusion recently then they can exclude $500k from their federal income
Taxes? If you are talking about another $500k on top of that then is it really that bad to pay $100k in taxes on $1m?

Must’ve lived in the house 2 of the past 5 years to take this exemption.

[Anonymous]

That’s only if you have to move and don’t meet the 2 out of 5 year test.

It isn’t an additional exclusion.

[Anonymous]

Don't forget you can reduce the basis for improvements they have made over the years.

[Anonymous]

Anonymous wrote:Don't forget you can reduce the basis for improvements they have made over the years.

Sorry increase the basis

[Anonymous]

Remember that at continuing care places a good portion of the buy in is attributable to medical expenses and create a big deduction that year. I just did this with my mom and she was able to shield a lot of gain after the primary residence exclusion. Talk to the financial office at the facility they are moving to, they will be able to give you details.