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Financial Planning / Tax Strategies


Subject:  Re: Home Sale Tax Exemption Date:  9/25/2005  10:50 AM
Author:  TMFPMarti Number:  80841 of 127987

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.

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