Married Filing Jointly—How does Capital Gains Exclusion when one qualifies for primary residency on joint property?

[LauraA4]

Hello, 

Married filing jointly couple own Primary Residence in NY jointly and residence #2 in FL jointly. If one of them changes residency to FL for required period before selling #2 FL property and it qualifies as primary residence for them, how is the Capital Gains Exclusion calculated? and what timeframe would they need to apply it again in NY, assuming the FL resident changes back to NY residency? 

Thanks!

[MaryK4]

For the exclusion for gain on the sale of a primary residence; if you file a joint return, both spouses must meet the ownership and residence tests but you file separate returns for the year of the sale, you would only look to the spouse which is claiming the exclusion.  For the second sale, the exclusion can only be claimed once in a two year period to meet the lookback test and all other requirements must be met- so once again, you have to make sure you qualify and if filing separate might be helpful (you should definitely plan on spacing the sales so the timing is correct).