home exclusion

[lbe]

Client qualifies for the 250,000 exclusion when he sells his home however he gets married in the year he sells his property. The property is titled in his name only and the property is in a common law state. They file a MFJ return for that tax year. Are they entitled to a $250,000 or a $500,000 exclusion on their MFJ return. Thanks in advance.

[solomon]

The ownership test is met but not the use test - 250K. From §1.121-2(a):

(3) Special rules for joint returns —(i) In general. A husband and wife who make a joint return for the year of the sale or exchange of a principal residence may exclude up to $500,000 of gain if—

(A) Either spouse meets the 2-year ownership requirements of §1.121–1(a) and (c);

(B) Both spouses meet the 2-year use requirements of §1.121–1(a) and (c); and

(C) Neither spouse excluded gain from a prior sale or exchange of property under section 121 within the last 2 years (as determined under paragraph (b) of this section).

[taxea]

home exclusion

Is he selling before or after he gets married?taxea

[lbe]

home exclusion

He sold the property after he got married. It sounds like from (solomons post) that both spouses have to meet the 2 year use test. In that case, it appears that they would only be able to take the 250,000 exclusion (i think).

[solomon]

He sold the property after he got married. It sounds like from (solomons post) that both spouses have to meet the 2 year use test. In that case, it appears that they would only be able to take the 250,000 exclusion (i think).

You think correctly. Selling before or after marriage has no bearing on it in this case.

[Davc]

We don't know if she met the use test. They may have been co-habitating in the house for several years.

[lbe]

home exclusion

Thanks to both of you.