Denver, CO asked in Real Estate Law for Colorado

Q: Is a property that's been passed via quit claim deed eligible for the $250,000 gain exemption on primary residences?

Basically, I have a condo that is legally titled in my parents name. I have occupied the condo as my primary residence for almost 4 years, and now that we are looking to sell I was hoping to find out the tax consequences. One option we've been discussing is the use of a quit claim deed to pass title from my parents to myself and my wife. The big question is whether the fact that I've occupied the condo as my primary residence for almost 4 years will result in me being eligible for the $250,000 tax exemption on the property's growth. By transferring title, I've technically met the requirements of ownership and primary residence. Will this work?

Edit: In response to John's answer, we meet all of the requirements listed in Publication 523 for our "main home". In addition, I have made all mortgage payments and been the sole decision maker in regards to the property. In summary, the rights and responsibilities of the property are mine. Is this a strong argument for my ownership?

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1 Lawyer Answer
John Roland Lund
John Roland Lund
  • Carbondale, CO
  • Licensed in Colorado

A: The problem is that you must own the property for two years. The title is going to the primary if not sole determinant of who has owned the home. Unless you have some basis for claiming you hvae been the owner, I don't this this is going to work. See Publication 523 of the IRS for details. .

Timothy Canty agrees with this answer

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