My client owned his residence for 10 years. His significant other lived there during this entire period. If he sells the house in May and they marry in July and file a joint return for 2006 do they get a $500,000 exclusion. Per the description on page 6-17 of TTB it would seem they do get the $500,000. The crux of this question is can he sell before they marry or does he have to sell after marriage (in either case the sale and marriage will happen in the same year).
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Exclusion
In reading what is in TTB it appears that they can exclude 500k. Married homeowners can exclude 500k if:
1) They file a joint return for the year
2) Ownership. Either (or both) spouses owned the home for 2 out of last 5 years.
3) Use. Both spouses used the home as principal residence for 2 out of last 5 yrs
4) Neither has excluded a gain in the last 2 years.
Sounds like they meet the ownership test because one has owned it and the use test because they both have lived there.
MattI would put a favorite quote in here, but it would get me banned from the board. -
spouse did NOT own
The exclusion is determined at the time of sale. At that time, the S.O. didn't qualify because her spouse did NOT own the house. There wasn't any spouse at the time the exclusion was applied.Comment
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???
Only one has to own. Both have to be there 2 out 5...Comment
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at the time of sale
... and they have to be married. At no time during their marriage did either spouse own the house or sell the house. The husband sold it as a single person, and the exclusion can only be applied to gain realized at the time of sale.Comment
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home sale
You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true.
You are married and file a joint return for the year. Where does it say you have to have been married when you sold the house? It just says you are married and file a joint return.
Doesn’t the rule apply that if married on Dec. 31, you are considered married for the whole year.Comment
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I agree with Matt Sova, the original post appears to meet all 4 requirements and if married filing a joint return at year-end they get a $500k exclusion.Comment
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Someone recently asked me if she had to file two returns, because she didn't get married until October. Take the 500k.Comment
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