Suppose you sell home that you've lived in for over 5 years (meeting rules for section 121), then marry by end of year. Do you get the 500k exclusion? Seems per
section 121), then marry by end of year. Do you get the 500k exclusion? Seems per
From p13, Pub 523:
Example 1?one spouse sells a home. Emily sells her home in June 2012 for a gain of $300,000. She mar-ries Jamie later in the year. She meets the ownership and use tests, but Jamie does not. Emily can exclude up to $250,000 of gain on a separate or joint return for 2012. The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test.
This seems to match your scenario.
Right, that's exactly what it says. If you both have lived there for at least two years out of the last five, and you are married by the end of the year the sale takes place, you get the double exclusion even if only one of you was on title.
I withdraw my remark above, the spouse meets the 2/5 test. $500K it is.
All this scenario means is that if the other person doesn't meet the use test then no 500k. But if the other person does meet the user test then it does not imply that now the exclusion is 500k because a literal interpretation of the popular phrase "if you're married then you get a 500k exclusion" means "if you're married [at the time of sale] then you get a 500k exclusion". But looking at the law it just says: "In the case of a husband and wife who make a joint return for the taxable year of the sale or exchange of the property", which clearly says nothing about being married at the time of sale.
All this scenario means is that if the other person doesn't meet the use test then no 500k. But if the other person does meet the user test then it does not imply that now the exclusion is 500k because a literal interpretation of the popular phrase "if you're married then you get a 500k exclusion" means "if you're married [at the time of sale] then you get a
500k exclusion". But looking at the law it just says: "In the case of a husband and wife who make a joint return for the taxable year of the sale or exchange of the property", which clearly says nothing about being married at the time of sale. =================== If both spouses USED the property as their primary residence for 2/5 years, then the maximum exclusion is $500k, even if they are NOT married at the time of the sale as long as they marry by the end of the year. This is because of the rule requiring that only one of them be the property's owner; One owns it; both have used it. There is no requirement to retitle the property -- even in community property states.I assume that neither spouse used such an exclusion in the 2 years prior to the tax year in question.
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