A You appear to qualify for this tax break, but your brother doesn’t. To qualify for the home-sale exclusion, you must have owned and used the home as your principal residence for two of the past five years. You—but not your brother—should be able to exclude from federal income tax the first $250,000 of gain attributable to your interest. You—but not your brother—should be able to exclude from federal income tax the first $250,000 of gain attributable to your interest. Your brother must pay tax on his allocable portion of the gain. Tip: After the house sells, issue Form 1099-S (Proceeds to Real Estate Transactions) to your brother. Visit www.irs.gov/pub/irs-pdf/f1099s.pdf for more information.
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