How about this scenario: husband has lived in house at least 24 months in past five years, but wife has not, due to a second residence (which is rented, not owned). House has been owned by both spouses for more than five years. They sell house. Cap gain is $400K.
QUESTIONS
(1) Because the wife doesn't have the required 24 months there, can this couple file separately in the year of that sale, and husband take the individual exclusion of currently $250K, rather than the joint married exclusion of $500K?
(2) And if they do file separately, can the entire cap gains be listed only on the husband's taxes, so that he can maximize that exclusion? Or does the cap gains have to be split equally and listed into both of their separate returns?
