@HRP20 wrote:
Yes both homes in California. We still see each other, but live separate as healthier for our relationship. We are both over age 75 & retired. This topic came up because I need to sell my house and move to assisted living and my spouse thinks there's no way for me to get the Tax exemption for selling my house as my primary residence even though all utilities at my house are in my name I think should be proof even though he has always done our taxes and address lists his address for the Joint return.
Because you live in separate homes, you can claim an exclusion of up to the first $250,000 of capital gains as long as you owned the home at least 2 years and lived there as your main home for at least 2 of the past 5 years. Or, if you owned the home less than 2 years or lived there less than 2 years, you can claim a partial exclusion if you are selling due to a "hardship" (which seems to be the case).
See publication 523.
https://www.irs.gov/forms-pubs/about-publication-523
You can't use the joint exclusion of $500,000, even if you file jointly, because you live apart. But you can use your $250,000 exclusion on the home you live in, and this will not limit your spouse from using their exclusion if they want to sell their house now or later.
What counts is whether or not you owned the home and lived in the home as your main residence. This is not controlled by the fact that you used a different address on your tax return. If audited, you would prove where you actually lived using things like utility bills, newspaper or telephone subscription, bills or statements from your doctor, pharmacy, credit cards, etc. showing where you live, and so on.
Your spouse is over-thinking.
