Capital Gains Tax on Home Brother has Occupied?

4 Replies

My brother and I purchased a fixer upper in 2008, and we both lived there for several years before I moved out and purchased a different home. My brother has continued to occupy the house and make the mortgage payments on his own. He is now getting ready to sell and purchase a new residence, but I am wondering how I will be impacted if we split the profits of the sale 50/50.  Is there a way to protect my earnings or direct them (tax-free) into a new investment property? I wouldn't think I could 1031 the proceeds of my portion. Is that right? 

You can't 1031 because it's not a rental. 

When did you move out?

Who's been claiming the home on their taxes? 

Do you both actually own the property? 

@Jared Mcgrew , If you had both bought that property as an investment and then he later moved in there may be a case to be made for you to 1031 your half now if you needed to.  But you bought the property as a primary residence for you and he.  It's going to be a tougher case to make.  But that begs the easier question.  Did you live in it for two out of the last 5 years?  If so your gain up to $250K is protected.