Got married and sold my house. How should I file - married joint or married separate?

[lpmartin05]

I purchased my home in Aug 2013. My now husband also owned a home. He moved in with me November, 2014 but never officially changed his address. In 2016 we married in June, sold my house in August, and moved to his home in October.

In order to avoid capital gains my husband thinks we need to file married separate because he has no documentation showing he lived with me. But filing joint would help my taxes out tremendously.

How should we file? The gain on the home was less than the $250,000.

[IsabellaG · Accepted solution]

It's almost always better to file a joint return, particularly if you itemize deductions. Whether your husband lived with you or not has no bearing on your capital gains tax, so I don't know what he means by that. You can file a joint return as long as you were married as of 12/31/2016. His official residence has no effect.

If you owned lived in your house as your principal residence for at least two of the last five years, you would be able to exclude the gain from tax, up to $250,000.

The best way to be sure is to try preparing a joint return and two separate returns to see which status results in the lower tax. 

https://www.irs.gov/uac/irs-issues-home-sale-exclusion-rules