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A House Divided Can't Stand

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in Small Business Tax

Q  You said a married couple can claim a $500,000 home sale gain exclusion if certain requirements are met. Can we claim the $500,000 exclusion on our joint return if we marry this year and then sell our house?

A  It depends. To qualify for the exclusion, you must have owned and used the home as your principal residence for at least two of the past five years. For a married couple, only one spouse has to meet the ownership test, but both spouses must meet the use test. Therefore, if you sell a home after marriage, you won’t qualify for the $500,000 exclusion for a married couple unless you both lived in the home for at least two years during the five-year period ending on the sale date.

Tip: If you wait at least two years before selling the home, you should be able to claim the full $500,000 exclusion.

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