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Author: brucedoe Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Home Sale Tax Exemption Date: 9/25/2005 10:39 AM
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We have just moved, and I don't have access to things yet. An interesting question came up, will a woman whose husband died more than two years ago still qualify for the $500,000 exemption on sale of her home? The thought was that if the husband died within the previous two years, she would qualify for the $500,000 exemption, but I don't know of this for sure. surely she would qualify if she sold in the year of his death.

brucedoe
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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 80841 of 121061
Subject: Re: Home Sale Tax Exemption Date: 9/25/2005 10:50 AM
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We have just moved, and I don't have access to things yet. An interesting question came up, will a woman whose husband died more than two years ago still qualify for the $500,000 exemption on sale of her home? The thought was that if the husband died within the previous two years, she would qualify for the $500,000 exemption, but I don't know of this for sure. surely she would qualify if she sold in the year of his death.

It's not $500,000; it's $250,000 per person on a joint return. Thus, a $500,000 exclusion would be available only if the house was sold within the year of the husband's death, the last year for which she can file a joint return.

If the home was jointly owned, she probably gets a stepped-up (to FMV) basis for at least his half; maybe more, depending on state law. IRS Publication 551 covers basis; Pub 523 the gain exclusion.

Phil

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