2793017
I recently sold my home and I lived and own in it 4 1/2 year total. My husband passed away mid 2019 and I ended up going to the ICU due to medical reason a few month after. I have been having problems going to the room my husband was when I was taking care of him and my job was also tied to taking care of my husband so when he passed away I became unemployed and was collecting unemployment until September 2021. I didn't have the funds to keep up with the house after that so I ended up having to have to sell the property. But I was told at first that living their for at least two years would grant me the exclusion of up to 500,000 in taxes from the sale of the house but I later read I needed to have owned the place for at least 5 year for it to count. I read that loss of job or death in the family can help with the exclusion. Is any of my situation able to count as that when I have to file taxes next year?
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First, I am sorry for you loss, sounds like it was a rough time. The rule is that you have to have lived in the house 2 of the last 5 years. So even if you owned the house for 25 months then as long as you lived in it for 24 months then you qualify for the exclusion. The tricky part for you is that you only qualify for $250,000 exemption (you would have had to sold it while you were filing jointly with your husband to get the full $500,000) but you do get a "step up" in basis (see my example below).
Bought house in 2018 for $100,000
Husband passed in 2019 and the house was now worth $140,000
Your new basis in the house is your original 50% ($50,000) plus the stepped up value of 50% of your late husband (50% of $140,000 = $70,000) so a total of $!20,000
**this is the general rule and may be different depending on the state you live in
That should help offset the gain which is figured this way:
House sold in 2022 for $$360,000
Less your basis of $120,000
Gain of $240,000
amount allowed as an exemption to gain is $250,000 which is more than your gain so no tax
Note that you will want to report the sale on your tax return in order to clarify to the IRS that there is no gain on the sale that is taxable.
So it was my son home he got it in 2011 and my husband and I moved in with him in 2013 due to my husband needing help with his medical and later on my son moved away and gifted me the home in 2017 and in 2019 my husband passed away. But counting the years of when I was gifted it and had to sell it seems I only owned the house for 4 1/2 year. Do I qualify for the 250/500 tax exception?
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