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Anne
Anne, Master Tax Preparer
Category: Tax
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Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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My husband and I bought a condo (first home purchase) in DC

Resolved Question:

My husband and I bought a condo (first home purchase) in DC April, 2008. My husband works in Md Monday-Friday and lives in a rented apartment there. I work in DC so stay at our condo in DC Monday-Friday. We split our weekends between the two places.

In 2008, I paid income taxes to DC, he paid them to MD, and we listed our DC adddress on our taxes to count toward the two year occupancy rule that must be met so we can avoid capital gains taxes when we sell our DC place.

We had a daughter in 2009, so I was on leave and earned about half of what I normally do. We did however earn some capital gains in a taxable stock portfolio in my name.

Two questions:
1. Will I need to pay capital gains taxes to DC or MD for our 2009 taxes since the stock account is in my name?
2. Do we need to file our taxes with our DC address to show it is our primary residence for a full 2 years to avoid getting hit with cap gains tax when we sell the condo? Or can we prove it some other way?

Thank
Submitted: 4 years ago.
Category: Tax
Expert:  Anne replied 4 years ago.
HiCustomerbr />
Thank you for using justanswer. First, congratulations on the birth of your daughter! What a wonderful gift you received this year!

If I'm reading you correctly, you live in DC and your husband has his "home of record" as being DC, but he works in MD, so I'm assuming that he filed and paid taxes as a non resident of MD.

If the above is correct, then you pay capital gains tax to the state that you consider to be your home state, which sounds like its DC from the information above.

In order to meet criteria to exclude up to the full $250,000, you and your husband must BOTH meet the "use" test (meaning you both used the residence as your main home for at least 2 out of the prior 5 years before the date of sale.) Please see below:

Excluding the Gain

So, unless your husband has lived in the DC home for at least 2 years, then you will want to continue to file jointly with DC being your home state, and your husband filing and paying taxes to MD as a non resident .

I hope this helps.
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 1699
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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