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Find the keys to home sale exclusion

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in Small Business Tax

Q. I’m getting married this year (second marriage). Can we sell her home and get the full home sale exclusion for a couple? B.D., Doylestown, Pa.

A. Probably not. To qualify for the home sale exclusion, you must have owned and used the home as your principal residence at least two out of the past five years. The maximum $250,000 exclusion for single filers is doubled to $500,000 for joint filers. If you marry this year, only one spouse has to meet the “ownership test” but you both must meet the “use test.” Therefore, unless you’ve been living in your soon-to-be spouse’s home, she is limited to the $250,000 exclusion until you have both lived there for at least two years. After that, she would qualify for the larger $500,000 joint-filer exclusion.


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