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?
Thanks for the reply. Moved out 2013. Have not claimed it on my taxes since 2013. Yes were both on the mortgage note and plan to 50/50 when we sell.
@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.
Thanks Dave, we both bought it as primary residence and a fixer upper in 2008. We both lived there since we bought it, I moved out 2013 and haven’t lived there since then