@Opus 17 wrote:
@Hal_Al wrote:
Q. If I lived in my house for 1 year & 2 months & sold it because of the death of my husband, do I have to pay capital gains on the profit?
A. Simple answer: no. Death of a spouse is an exception to the 2 year ownership/living in rule.
But taxes aren't simple. As others have said, how you go about reporting it depends on more details. You say you lived in the house but don't say whether you also owned it.
The "partial exclusion" (14/24 x $500,000 = $291,667) is actually a reduced maximum exclusion. If your gain is less than $291,667, you will be able to exclude it all.
This assumes the spouse died and the home was sold in the same year, when the taxpayer files married filing jointly.
I believe that if the spouse died in 2023, and the taxpayer sold in 2024, the partial exclusion would be based on their single (or surviving spouse) status, and would be 14/24th x $250,000 = $145,000.
Actually, my statement above is incorrect.
If the surviving spouse sells within 2 years of the death of their spouse, and has not remarried, they can claim the full $500,000 exclusion even though they would be filing single or surviving spouse (or, a partial exclusion calculated fro $500,000). See publication 523, Worksheet 1.
