I need help with my Mom’s situation

[kj]

My mom moved 3yrs ago into a smaller more manageable house that has been great for her. However, the government (city, etc.) is building an enormous affordable housing project right next to her (200+ apartments, 6 story) and people are leaving her neighborhood, knowing it’s going to be really bad (I’ve seen it play out in Cali, and I know it will be bad). She wants to sell and move to an apartment. I know if she doesn’t buy anything, she will have to deal with capital gains, but I know nothing about that. Have any of you dealt with that? I also wonder what other issues we might run into. I don’t have a lot of influence over her, but I may be able to bring up at least a thing or two, or plan for the fallout. Any perspective would be appreciated because I don’t even know what type of professional I would talk to. Thank you.

[Speedy]

https://www.irs.gov/taxtopics/tc701

The $250,000/$500,000 home sale tax exclusion - If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse. Publication 523, Selling Your Home provides rules and worksheets. Topic no. 409 covers general capital gain and loss information.

Qualifying for the exclusion
In general, to qualify for the Section 121 exclusion, you must meet both the ownership test and the use test. You're eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale. You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale. Generally, you're not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home. Refer to Publication 523 for the complete eligibility requirements, limitations on the exclusion amount, and exceptions to the two-year rule.

[GGD]

How much do you think this house appreciated after just 3 years? If she's lived there at least 2 of the past 5 years then she may be exempt from the first $250,000 in capital gains. And the gains are computed after subtracting out selling costs like realtor fees, and improvements. Taxes may not be a significant issue.

https://www.irs.gov/taxtopics/tc701

[raz]

Is she going to buy the apartment or rent?

[Michael]

It looks likely that she won't have any tax issues based on the exclusion.

I think the most helpful thing you can do is to look at the various rental options and find some that have the types of amenities that you think she'd like and are in the right neighborhoods, given the type of shopping and activities that she likes to engage in. If she's a church-goer, that would be relevant, as are hobbies and doctor's offices. One thing that most of us probably don't think about is a senior center. There's an apartment very near the one in our town and I regularly see older folks walk down the sidewalk to the center. You might start with a site like apartments.com but also do a Google search looking for apartments in the area.

[Speedy]

Have her move in with you.

[Ombligo]

Perhaps a senior complex would be a good option. She would be around other seniors yet still have the freedom to come and go. They often have activities and trips, etc. Some even include meals.

[vision63]

Bless your dear mother. She sounds like a strong woman.

[Speedy]

Ombligo wrote:
Perhaps a senior complex would be a good option. She would be around other seniors yet still have the freedom to come and go. They often have activities and trips, etc. Some even include meals.

Some even have a few men as residents.

[kj]

She would rent. She’s not sure she wants to stay put, which is a legit thing. She looked into an actual senior complex, which I thought looked great, but she’s not sure she can afford it, and it was spendy. The place she’s already put a deposit on is less than a mile from our place, and my brother’s place, so that might be good. We were worried about taxes if she sells and doesn’t buy again. I’m worried with the apartment building going in that she won’t be able to sell, so then will be on the hook for both places. Thanks for the input, I really appreciate it a lot.