Tax Exemption

[jyeh74]

My question involves real estate located in the State of: CA

My understanding is that when a married couple sells a home, can be exempt up to $500k in capital gains. If they live in 2 out of the last 5 years. Do they have to purchase the property as a married couple? Or can one person buy it as a single person, live in it, get married, then sell it as a couple later to get the $500k tax exemption?

[adjusterjack]

You get the $500k exclusion. The following is right out of IRS Publication 523 Page 3 Ownership

Determine whether you meet the ownership require-ment.If you owned the home for at least 24 months (2 years) out of the last 5 years leading up to the date of sale (date of the closing), you meet the ownership requirement. For a married couple filing jointly, only one spouse has to meet the ownership requirement.

Here's the publication:

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

[llworking]

My question involves real estate located in the State of: CA

My understanding is that when a married couple sells a home, can be exempt up to $500k in capital gains. If they live in 2 out of the last 5 years. Do they have to purchase the property as a married couple? Or can one person buy it as a single person, live in it, get married, then sell it as a couple later to get the $500k tax exemption?

It's actually not a tax exemption, its a capital gains exclusion. It doesn't matter how the home was owned, it just matters that its the marital residence.

[jyeh74]

It's actually not a tax exemption, its a capital gains exclusion. It doesn't matter how the home was owned, it just matters that its the marital residence.

So all that matters is the home was sold by a married couple regardless of whether or not the property was acquired by one or two people? Given that the use requirement is also met.

[adjusterjack]

So all that matters is the home was sold by a married couple regardless of whether or not the property was acquired by one or two people? Given that the use requirement is also met.

Yes.

[flyingron]

Note, that the way the law now stands, if there is any non-conforming use (e.g., rental) in the 60 month period, the exclusion gets prorated.