Two home sales $250K exclusion
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Returning Member

Two home sales $250K exclusion

When I got married in 2016 I already owned a home.  I started renting it out and sold it in 2019.  I meet the use and ownership test on that house to claim the exemption.  

 

Additionally, in 2017 my wife took out a mortgage to buy a house and I was added to the deed as I'm her spouse.  

 

So I would like to know if I can claim the $250k exclusion on the house I owned prior to marriage and my wife can claim the $250k exclusion for the house she bought once we were married?

 

I was the only one on the deed for my house and the one that was bought after being married had both our names on the deed.  

 

Both homes were sold in 2019.

 

On an individual basis we both seem to qualify for the ownership and use test.

 

The IRS states that if a married couple does not qualify for the $500k exclusion( which we wouldn't because I would be claiming the exclusion on my original house so I wouldn't be eligible to do it again for the sale of the other house) that  " the exclusion is figured separately for each spouse as if they are 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 during the period that either spouse owned the property. For joint owners up to $250,000 of gain is tax free for each qualifying owner."

 

Looking for a confirmation in my findings.

 

Thank you

 

 

2 Replies
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Level 4

Two home sales $250K exclusion

I'd get a tax pro for this because you might have to file separate returns.

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Level 15

Two home sales $250K exclusion

if both spouses own homes and each meets the ownership, use and frequency (neither spouse excluded gain from sale of another home in the two years ending on date of sale of the current home) each spouse can exclude up to $250,000 gain on sale of their own home).  the question I can not answer for certainty is whether your ownership of the 2017 home disqualifies you from using this rule. (the sale of the 2017 home could be deemed as a sale of a second home by you within the 2 year period). I read the frequency rule as qualifying both of you to exclude only 1 home sale.  You also have to recapture the depreciation you took or should have taken on your home during the period it was rental. it may not matter whether you file as Married filing separate because of your ownership and sale of 2 homes within a 2 year period.

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