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  1. #1
    Join Date
    Apr 2011
    Posts
    182

    Default Tax Exemption

    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?

  2. #2
    Join Date
    Mar 2013
    Posts
    18,340

    Default Re: Tax Exemption

    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

  3. #3
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Tax Exemption

    Quote Quoting jyeh74
    View Post
    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.

  4. #4
    Join Date
    Apr 2011
    Posts
    182

    Default Re: Tax Exemption

    Quote Quoting llworking
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    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.

  5. #5
    Join Date
    Mar 2013
    Posts
    18,340

    Default Re: Tax Exemption

    Quote Quoting jyeh74
    View Post
    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.

  6. #6
    Join Date
    Sep 2010
    Posts
    19,901

    Default Re: Tax Exemption

    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.

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