Capital Gains Tax

[freeflight]

What is the name of your state? California

A friend owns a home in California. She is the only person named on her title. She recently married (5 months ago). She and her new husband are considering selling their home. They will likely have >$250K in profit. If she places her husbands' name on the title, can she keep $500K tax free? If not, how long does her husband have to be on the title before she is permitted to profit >$250K without capital gains tax?

Thank you very much,
ff

 

[lazar627]

Hi there

Your friend just needs to file with her husband as Married Filing Joint and they can enjoy a $500,000 exemption on the gain from the sale of the home. She can hold the title solely, but the gain will be for the both of them on the same tax return. Hope this helps. Have a nice day.

Brad

 

[Snipes5]

Wrong.

It is true he does not need to be on the title. (Only one spouse has to be on there). HOWEVER, his portion of the exclusion will be prorated based on the number of months he lived in the house after the marriage.

The calculation is made by taking $250,000 dividing by 24, and multiplying by the number of months he lived in the house. That is his portion of the exclusion.

She gets full exclusion of $250,000. If he lived in the house for five months, his exclusion will be $52083, making their total exclusion $302,083, not $500,000.

Snipes