Home sale capital gain exclusion help.

[kpangelinan]

A single person owns a home for over 20 years.....wants to sell this year. If she gets married before 12-31-11, is she eligible for both the husband and wife capital gain exclusion of $250k each? Does the new husband need to be on the deed.

My thoughts think they do, but was wondering if there was any TTB pages to reference or if any of you had any experience on it.

Thanks!

[Lion]

6-19

TTB pages 6-19

Either spouse or both must have an ownership interest; both spouses must meet the use text and not have excluded within 2 years. So, unless they've been living together...

[kpangelinan]

TTB pages 6-19

Either spouse or both must have an ownership interest; both spouses must meet the use text and not have excluded within 2 years. So, unless they've been living together...

So, even if he owns his own home, but has been living with her the last 3 years, they each can claim the $250k exclusion? House is in her name only.

Checking out the text now, thanks!

[Lion]

Principle Residence

If the house they're selling was his principle residence and they file MFJ, they have a $500,000 exclusion. Read TTB. The only test they get to omit for MFJ is the ownership test; it has to be met by at least one spouse but not both. All other tests must be met by both spouses.

[kpangelinan]

If the house they're selling was his principle residence and they file MFJ, they have a $500,000 exclusion. Read TTB. The only test they get to omit for MFJ is the ownership test; it has to be met by at least one spouse but not both. All other tests must be met by both spouses.

Got it! Thanks for being clear on it.

[kpangelinan]

TTB also noted that either couldn't have "excluded the gain from the sale of another home during the 2 year period ending on the date of the sale".

Thanks again for the help! Love this board.

[Lion]

All

Definitely, they have to meet ALL three tests. One spouse can fail ownership but still must meet other two tests.

[Lion]

And...

Just make sure his other house was not his principle residence during the required time, that he lived in his wife's house for long enough, and that he didn't exclude a prior sale. Sounds like you might know your own client's history, but that her potential husband may be new to you.