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CGassist.168, Accountant
Category: Capital Gains and Losses
Satisfied Customers: 3725
Experience:  Tax Accountant
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We purchased our current home in 2004 thru a starker like exchange

Customer Question

We purchased our current home in 2004 thru a starker like exchange from a home we purchased in 1978. It was rented out from 2004 until 2012 when we moved into it and made it our primary residence. My husband and I filed joint taxes and both of our names are ***** ***** mortgage. My husband passed away in October 2014. My question is on the 500,000 exemption (for married couples filing jointly) for capital gains when I sell this house. Do I continue to get this 500,000 exemption or do I get cut down to the 250,000 exemption now that my husband has passed away. Your response and advice on this issue is appreciated. Thanks much.
Submitted: 2 years ago.
Category: Capital Gains and Losses
Expert:  CGassist.168 replied 2 years ago.
Thank you for contacting us today. My name is ***** ***** my goal is to efficiently assist you with your Capital Gains matters.
Due to a recent change, a widow has 2 years to use the $500,000 exclusion. SEE BELOW:
Previously, a surviving spouse could claim the full $500,000 exclusion only if the home was sold in the year that a joint return was filed, which generally is limited to the year the spouse dies. But now a surviving spouse may exclude up to $500,000 of profit from the sale of the principal residence if it occurs within two years of the spouse’s death.
Let me know if you require further assistance with this matter.
Expert:  CGassist.168 replied 2 years ago.
Additional info from IRS Pub 554:
Sale of home by surviving spouse. If you are an unmarried widow or widower, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. For more information, see Sale of Home , later.
Sale of Home
You may be able to exclude from income any gain up to $250,000 ($500,000 on a joint return in most cases) on the sale of your main home. Generally, if you can exclude all of the gain, you do not need to report the sale on your tax return. You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale.
Main home. Usually, your main home is the home you live in most of the time and can be a:
Mobile home,
Cooperative apartment, or