It's a bit complicated. Are you and your husband anticipating receiving some of the proceeds, or will it all go to your son? Do you have an agreement on how the proceeds will be divvied up? I think you could argue that the capital gains should follow the money. To the extent you receive funds, a share of the gains should be allocated to you. If it all goes to your son, then none should be allocated to you. With respect to the capital gains allocated to your son, he can exclude the first $250,000 since the house is his primary residence ($500,000 if he is married at the time).
Harry S. Margolis practices elder law, estate, and special needs planning in Boston and Wellesley, Massachusetts. He is the founder of ElderLawAnswers.com and answers consumer questions about estate planning issues here and at AskHarry.info.
