Does either the $250,000 or $500,000 exemption on gain from sale of home apply if only my spouse lived in the home for 2 of the 5 years prior to sale?

abeutler — Mon, 03 Jun 2019 20:26:08 GMT

I moved out of state for work prior to 5 years before the sale. My wife remained in the residence for more than 2 of the 5 years and continued her employment. Upon retirement, she moved into our new residence and the former residence was rented before it was sold. Sale was within 3 years after she moved out.

If your wife meets the requirements, she is eligible for...

NancyG — Mon, 03 Jun 2019 20:26:10 GMT

If your wife meets the requirements, she is eligible for a $250,000 exclusion.

With neither spouse meeting the residence requirement of the other spouse's primary residence, each spouse gets a separate exclusion of up to $250,000, as if not married, and the two exclusion amounts add together on the joint tax return, as indicated in section 121(b)(2)(B).

Sale of Personal Residence:

It depends on how long you owned and lived in the home before the sale and how much profit you made. If you owned and lived in the place for two of the five years before the sale, then up to $250,000 of profit is tax-free.

If you are married and file a joint return, the tax-free amount doubles to $500,000. The law lets you "exclude" this much otherwise taxable profit from your taxable income. (If you sold for a loss, though, you can't take a deduction for that loss.)

You can use this exclusion every time you sell a primary residence, as long as you owned and lived in it for two of the five years leading up to the sale, and haven't claimed the exclusion on another home in the last two years.

If your profit exceeds the $250,000 or $500,000 limit, the excess is reported as a capital gain on Schedule D.

topic Does either the $250,000 or $500,000 exemption on gain from sale of home apply if only my spouse lived in the home for 2 of the 5 years prior to sale? in Deductions & credits

Does either the $250,000 or $500,000 exemption on gain from sale of home apply if only my spouse lived in the home for 2 of the 5 years prior to sale?

If your wife meets the requirements, she is eligible for...