Home sale: Joint ownership, only one spouse meets use test, MFJ — how much gain can we exclude?

fege — Sat, 08 Nov 2025 14:30:17 GMT

Hi,

My spouse and I sold a home with about $80K in capital gains. We’re married, filing jointly, and both on the title. However, only one of us lived in the home for at least two of the past five years (the other spouse does not meet the residence test).

I know we can't get $500K exclusion but I am wondering if we can apply the 250K exclusion to both of our shares of ownership OR can we only exclude half the gain ($40K) for the spouse who qualifies, and the other half is taxable?

Thanks!

Re: Home sale: Joint ownership, only one spouse meets use test, MFJ — how much gain can we exclude?

pk — Sat, 08 Nov 2025 14:56:30 GMT

@fege ,

generally, if the situation is that (a) at least one has met the ownership requirement, (b) only one meets the 730 days of usage ( with a look back period of five years from the date of sale closing), and (c) you have not used this gain exclusion in the last 2 years, ONLY that person that meets all the requirement can exclude up to $250,000 of capital gain from taxation. Note that if the prop. under consideration was used a income property anytime during ownership, then the allowable accumulated depreciation must be recognized as a reduction to basis and any due to this must first be considered as ordinary gain ( re-capture), the rest of the gain is capital gain and eligible for exclusion treatment.

Based on facts and circumstances , there may be other "ands", "ifs" and "buts" applicable.

Is there more I can do for you ?

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Home sale: Joint ownership, only one spouse meets use test, MFJ — how much gain can we exclude?

Re: Home sale: Joint ownership, only one spouse meets use test, MFJ — how much gain can we exclude?