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Make the most of home sale exclusion

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in Small Business Tax

Q. My husband passed away three years ago. Can I make my 21-year-old son a co-owner to double the home sale exclusion? Anonymous, New Rochelle, N.Y.

A. Technically, this will work, although it will take some time. As long as both co-owners meet the “use” and “ownership” requirements, both you and your child can claim a home sale exclusion for the first $250,000 of gain. But you will have to wait at least two years from transferring the 50% interest to your son to sell the home and he must use the home as his principal residence for at least two years before the sale occurs.

Tip: This strategy may affect other financial and tax aspects, including mortgage interest and property taxes.

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