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Financial Planning / Tax Strategies


Subject:  Re: Sale of House Date:  3/16/2010  1:50 PM
Author:  ptheland Number:  109621 of 130765

To qualify for the exclusion under IRC 121, you need to own the house for two out of the 5 years before the sale and you need to have used the house as your principal residence for 2 out of the 5 years before the sale.

The house was sold on 5/15/09, so the relevant 5 year period is 5/15/04 through 5/15/09. Your husband use the house as his principal residence from 1997 until June 2006. So for the two years from 5/15/04 to 5/15/06, it was his principal residence. And he has owned the house for the entire time. So he meets the tests and may exclude up to $250k of gain.

On the other hand, it appears that you never used this house as a principal residence. So you do not qualify for any exclusion.

On a joint return (or on his separate return) he could claim up to a $250k exclusion.

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