capital gain question

Since you don't give us any numbers, "maybe."

If she sells her old home by September 2009 she will qualify for a $250,000 exclusion of gain. If he sells their current home at any time he is entitled to a $250,000 exclusion of gain. Since she's already living in "his" home, 2 years after she sells her old home he could sell their current home and exclude $500,000 of gain on a joint return. All this is covered in IRS Publication 523.

-- Phil Marti Clarksburg, MD

I suspect the last point was her issue. If she sells her home and they file joint returns, no exclusion will be allowed on the sale of the second home until two years after the sale of the first one. Stu

Yes, they can each sell each of their homes and exclude up to $250,000 each of gain from the sale of each house, even if they sell the homes in the same year and file a joint income tax return. Matter of fact, I think there's an example of exactly this situation in IRS's regulations on the principal residence exclusion.

That's the only way to get a $500,000 exclusion, but he would still be entitled to a $250,000 exclusion at any time and with any filing status.

-- Phil Marti Clarksburg, MD

That's the only way to get a $500,000 exclusion, but he would still be entitled to a $250,000 exclusion at any time and with any filing status.

-- Phil Marti Clarksburg, MD

Ok, thanks. I misread the statute.

Stu