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jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3161
Experience:  I've prepared all types of taxes since 1987.
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Capital gains tax exemption question. Leslie Kim wants to

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Capital gains tax exemption question. Leslie Kim wants to sell her house and wants to take advantage of capital gains tax exemption. She is married but her husband is not on the title. Can she still get the capital gains tax exemption for a couple (which is up to $500,000)?

This is the language of the title of this home:

"Title to said estate or interest at the date hereof is vested in:
Leslie Kim, a married woman as to an undivided 50% interest; and Leslie Kim, a married woman as her sole and separate property as to undivided 50% interest, subject to item #14.

#14: The community interest of the spouse of the vestee named below:
Vestee: Leslie Kim, a married woman"

Greetings,

 

So long as one of the spouses is the owner and both spouses occupied the home for two of the five years prior to the sale then the full $500K exclusion is available when married filing joint for the year of sale.

 

From http://www.journalofaccountancy.com/Issues/2002/Oct/TheHomeSaleGainExclusion.htm

"

Overall dollar limitation. The maximum gain
exclusion for an individual taxpayer is $250,000. Taxpayers who jointly own a
principal residence, but file separate returns, may each exclude up to $250,000
of the gain attributable to their interest in the home. A husband and wife who
file a joint return may exclude up to $500,000 of the gain if

Either spouse meets the two-year ownership requirement.

 

Both spouses meet the two-year use requirement.

 

Neither spouse excluded gain from a prior sale or exchange of
a principal residence within the last two years.

 

If the taxpayers do not meet any one of these requirements, the maximum
exclusion amount a married couple can claim on a joint return is the sum of each spouse's exclusion amount, determined as though

(1) the spouses were not married and

(2) each spouse owned the home during the period that either spouse owned
the home.

Although one spouse's ownership is attributed to the other for purposes of determining a separately calculated exclusion, both spouses must actually use the house as a principal residence to qualify for their own $250,000 exclusion. "

 

Please ask if you need more discussion or clarification.

Thank you.

Customer: replied 3 years ago.

Thank you for your answer. Both husband and wife occupied the home for 2 years. So this means Leslie Kim can sell the house as a married woman, correct? She does not need to add her husband to title and sell as husband and life, right?


 


Thank you, XXXXX XXXXX appreciate your answer.


 


 

Hello again,

 

What California property law or spousal benefit law requires for the titling or what might is needed as to consent of the spouse is a legal question that I can not answer as I am not a California attorney. In Florida, where I live, consent of the spouse is required for sale of the homestead that both spouses occupy; but the title need not be changed, in my layman understanding.

 

The gain on the sale of the primary residence will be eligible for the full $500K exclusion is available when married filing joint for the year of sale without changing the title, yes.

 

Hope that clarifies the tax question for you even though there may or may not be spousal consent, or retitling, required in California.

 

Thank you.

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