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Gerald, Esq
Gerald, Esq, Lawyer
Category: Legal
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Experience:  30 years of experience
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I have owned [BY MYSELF] my home past 15 years..My fiancée

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I have owned [BY MYSELF] my home for the past 15 years..My fiancée and I have lived in this home together the entire time. I am selling my home Sept. 2015. We plan on marrying in Nov. 2015. are we entitled to the one time $500,000.00 capital gains exclusion? or just the single person $250,000.00. Should we file a joint return in 2015?
Submitted: 2 years ago.
Category: Legal
Expert:  Gerald, Esq replied 2 years ago.
Thank you for using Just Answer. I want to provide you the best service I can. Please feel free to ask any follow up questions you have.
I am an attorney with 30 years of experience; I hope to provide you information that will help you in resolving your question.
Wow. You have a bit of a tricky one here. But you can take the $500,000.00 exemption if you are married in the same tax year as the sale and file jointly.
Normally, eligibility for the exemption requires two elements. Ownership and residence for two of the last five years.
If you married prior to the sale and filed a joint return you would clearly be eligible to take the $500,000.00 exclusion because you are entitled to the spousal exemption.
Since you are not married at the time of the sale the issue appears to be more complex. Your fiancee did not have an ownership interest in the house for two years prior to sale. Therefore, she does not meet the eligibility requirements as described by the IRS. She therefore would not appear to be eligible to claim the exemption as a co-owner.
See IRS publication 523:
BUT, the additional twist of fact is that you are marrying in the same tax year as the sale of the property, although after the sale. That actually works out for you. The IRS considers you married for the entire tax year in which you married. See IRS Publication 17:
Since the IRS considers you married for the entire tax year, the events that occurred in that Tax year can be applied to you both. This means you can claim the $500,000.00 exemption, but you must file jointly to do so.
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Please note: Information is educational and not given as legal advice. Only your local attorney can give legal advice. I can't establish or accept an attorney-client relationship with you. All posts are available for public viewing.