Discussion Archives:Exclusion of gain on husband-only owner of residence

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Discussion Forum Index --> Advanced Tax Questions --> Exclusion of gain on husband-only owner of residence


Discussion Forum Index --> Tax Questions --> Exclusion of gain on husband-only owner of residence

TaxAssistCPA (talk|edits) said:

26 June 2009
I have a client who sold residence and qualifies for the exclusion but the home was in the husband's name only. I am thinking that he only gets a $250K exclusion but wanted to make sure I wasn't missing something, i.e., I am correct that even though he files MFJ, he should NOT get $500K exclusion - since owned only by him??? Thanks!

Riley2 (talk|edits) said:

26 June 2009
Depends. If they file MFS, then the exclusion is $250K. If they file a joint return and the wife satisfies the 2-year use requirement, then they get $500K.

TaxAssistCPA (talk|edits) said:

26 June 2009
Thank you. They are filing MFJ and both have lived in the home as their primary for over 10 years. Where would I find a cite on this?

Riley2 (talk|edits) said:

26 June 2009
IRC Sec. 121(b)(2)(A)(i).

TaxAssistCPA (talk|edits) said:

26 June 2009
Thanks so much!

Liberati@frontiernet.net (talk|edits) said:

30 June 2009
Tuesday, June 30, 2009

Greetings, TaxAssistCPA.

To get the up to $ 500,000.00 sale of a home exclusion, only one of the spouses needs to actually own the house for at least two years during the five years ending on the date of sale for a couple that files Married Filing Jointly. However, for a couple filing Married Filing Jointly, both spouses must have lived in the house, and used, as their principal residence for at least two years - any two years - during the five years ending on the date of sale. Also, in this example, if the wife sold another house that she owned within the last two years ending on the date of sale of the husbands' house, then the sale of the husbands' house is only eligible for up to $ 250,000.00 of exclusion only.

Angelo Liberati CPA, CFE

Riley2 (talk|edits) said:

30 June 2009
Not really. The home they are selling was the principal residence of both husband and wife for the past 10-years. Consequently, I see no way that the reduced exclusion would apply.

Liberati@frontiernet.net (talk|edits) said:

30 June 2009
Tuesday, June 30, 2009

The point that I was making was referring to the situation where the wife here sold ANOTHER house that she owned in her name within the two years ending on the date of the sale of the HUSBANDS' house. I mentioned this point because the information given above does not address whether this situation exists or not. In this particular possible scenario, if true, the married couple is only entitled to receive up to a $ 250,000.00 of income exclusion on the sale of the HUSBANDS' house.

Angelo Liberati CPA, CFE

Trillium (talk|edits) said:

30 June 2009
Would have been tough for her to have used the Sec. 121 exclusion on another house in the last two years when she's lived in this one as her prncipal residence for 10!

Liberati@frontiernet.net (talk|edits) said:

30 June 2009
Tuesday, June 30, 2009

The answers above are another facet of the Section 121 exclusion that may not apply to this particular situation but is part of the law nonetheless.

Angelo Liberati CPA, CFE

Trillium (talk|edits) said:

30 June 2009
That is true - for others who may come later, your post could be quite valuable.

Harry Boscoe (talk|edits) said:

30 June 2009
So, what if the two years that the husband lived in the house during the five years leading up to the sale were a *different* two years from the two years that the wife lived there? I suspect I'm gonna feel stupid when I *actually read* Section 121 with this question in mind.... Maybe we can meet in the kitchen to discuss this one.

....................... break for trip to kitchen ......................

Here's the statutory language:

if -

(i) either spouse meets the ownership requirements of subsection (a) with respect to such property;

(ii) both spouses meet the use requirements of subsection (a) with respect to such property; and

(iii) neither spouse is ineligible for the benefits of subsection (a) with respect to such property by reason of paragraph (3).

So, it's "...if both spouses meet the use requirements...." Doesn't say "both spouses together" now does it? But it doesn't say "..each of the spouses" either...

I wonder if the Governor of South Carolina has a principal residence that he'll be trying to sell soon, and if the *joint* occupancy of that residence as a principal residence would be difficult to establish....

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