anitasavoy

Thanks for your reply. At present, the parents have a life estate according to the deed until they die, become a full-time resident in a skilled nursing facility, or vacate the property. The attorney who drew up the deed is most likely specialized in real estate & not elder law. The parents intend to vacate within 6 months. The son wanted to know how the sale would be taxed if sold within 3 years. The parents could get an exclusion for living there 2 out of 5 years. What I couldn't figure out was what % of the sale the son would have to report as income. In my original question I meant to say if the son is much "younger" not longer. I must have been thinking he would live longer than his parents.

If a house in a life estate is sold before the life tenant dies, the proceeds are split between the life tenanat and the remainderman. On p 7 of IRS Pub 1457, Example 2 shows a remainder factor of 0.37309. The income factor is 1- .037309 = 0.62691. So if the life tenant is 65 & the remainderman is 60, then does 62.691% of the sale go to the remainderman? Im not sure if I am using the correct example. If the remainderman is much longer than the life tenant, then if their interest more or less than the life tenant?