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null326
New Member

Can we sell two houses in one year and meet requirements for capital gain exclusions?

My husband and I got married in 2015. We both owned houses and lived in them as our primary residence through 2016. (I had lived in mine for 9 years and he had lived in his for 4 years since purchasing). In 2017, we rented my house and moved into his house as our primary residence. We want to sell both houses and upgrade to a different house this year. We meet ownership and residence requirements, individually for both houses. If we sell both in the same year, will that impinge on the look back requirement? Could we still qualify for the gain exclusion if we change our filing status to married, filing separately?

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3 Replies
MichaelDC
New Member

Can we sell two houses in one year and meet requirements for capital gain exclusions?

First, this is a situation where it would be prudent to talk to your tax advisor. However, there is some agreement in various tax forums that the following may explain your situation and how to file. Of course, because it's on the internet, doesn't always make it true. I'm sure others on this forum will offer further insights.

Each of you can use up to the $250,000 exclusion on your own house even if you file jointly. You can apply the exclusion rules to yourself in the same manner as if you were single. Each of you would then take advantage of your individual exclusion even if you file jointly.

The part of the rules that address married couples are to confer additional flexibility not to eliminate the exclusion for either of you as an individual. 

As an aside, a couple who has been married for a long time but who each have a different primary residence because of a job situation, aka a commuter marriage, can also file apply the law this way. In other words, they may file jointly and yet each use their own exclusion for the sale of the two separate homes.

If either spouse does not satisfy all these requirements, the exclusion is figured separately for each spouse as if they were not married. This means they can each qualify for up to a $250,000 exclusion. For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. For joint owners who are not married, up to $250,000 of gain is tax free for each qualifying owner.

See this link for further discussions :https://www.bogleheads.org/forum/viewtopic.php?t=174630

https://www.irs.gov/pub/irs-pdf/p523.pdf


JoeLam
New Member

Can we sell two houses in one year and meet requirements for capital gain exclusions?

The response indicates that it can be done using the single (not married filling joint) exclusion of $250,000 each. How to you do this in Turbo Tax? Turbo Tax does not appear to allow me to claim 2 homes while filing Married-joint.

Can we sell two houses in one year and meet requirements for capital gain exclusions?

when each spouse sells a home they own and each meets the ownership, use, and frequency tests, each spouse may exclude up to $250,000. Any exclusion not used by one spouse can not be used by the other.

sale of two primary residences can be done in Turbotax.  Two home sale worksheets are required if you meet the criteria.  You should come to a line that says something like "Maximum exclusion due to separate dispositions" enter $250,000 for each home 

 

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