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My husband is selling his primary residence. Since he is 66,

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Hi, My husband is...

Hi, My husband is selling his primary residence. Since he is 66, we have heard there will be no capital gains? True?

Accountant's Assistant: What state are you in? It matters because laws vary by location.

Washington State

Accountant's Assistant: Has anything been filed or reported?

NO

Submitted: 5 months ago.Category: Tax
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11/23/2017
Tax Professional: Tax.appeal.168, Tax Accountant replied 5 months ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 4,575
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Hello. Thank you for choosing this Q&A service for assistance. My name is***** am reading over your inquiry. I will respond to you shortly.

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Tax Professional: Tax.appeal.168, Tax Accountant replied 5 months ago

Respectfully, ***** ***** a myth, age has nothing to do with whether or not a person has to pay capital gains. Capital gains is determined by starting with the cost basis of the property being sold. The cost basis is the purchase price, plus improvements, and certain other costs). If the sales price is more than the cost basis, a gain has incurred, if the cost basis is less than the cost basis, a loss has incurred. Gain or loss, the sale must be reported. As for your husband, if he meets the requirements, he will likely qualify for the maximum home sale exclusion, which is $250,000 if filing single, of $500,000 if filing jointly and both spouses meet the residence part of the test. I am getting the requirements now, will send to you under separate cover....

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Tax Professional: Tax.appeal.168, Tax Accountant replied 5 months ago

Eligibility Step 2—Ownership Determine whether you meet the ownership requirement. If you owned the home for at least 24 months (2 years) during the last 5 years leading up to the date of sale (date of the closing), you meet the ownership requirement.

Eligibility Step 3—Residence Determine whether you meet the residence requirement. If your home was your residence for at least 24 of the months you owned the home during the 5 years leading up to the date of sale, you meet the residence requirement. The 24 months of residence can fall anywhere within the 5-year period. It doesn't have to be a single block of time. All you need is a total of 24 months (730 days) of residence during the 5-year period.

Meeting the above requirements means that even if your husband incurs a gain, there likely won't be any capital gains tax due because of the exclusion. The sale of the home is reported the Schedule D and the Form 8949.

REFERENCE SOURCE:

https://www.irs.gov/pub/irs-pdf/p523.pdf

IRS Publication 523

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