Will Adding Spouse to Deed of Property Affect Capital Gain Exemption?

[Spammed]

I live in AL. I purchased my house in 2004. I got married in 2005. We attempted to refi last yr due to the 15% interest on my post divorce and thanks for ruining my credit balloon loan. I added my wife to the deed post advice of the mortgage broker but then the refi fell through and now i am selling my house approaching the balloon of my loan. It has been less than 2 yrs since i changed the deed but it has been my primary residence since purchase and my wifes for almost 5 years. I am pretty sure we are joint tenants on the deed as it reads my name and hers. Will the change on the deed less than 2 yrs ago affect the capital gain exemption on the sale. I was pilfering around some tax law and stuff ( PLR 200018021 ) but still not sure if we will get stuck with a % or what. thanks in advance for any direction on this. I dont think there will be much of a profit but just wondering if i am gonna have to claim it next yr.

 

[FlyingRon]

No, the deed change won't change the "long term" status.
Lidj will have to chime in here, but I would even assert you both get to use your $250,000 exclusion provided you both have live there as a principal residence for 24 months out of the previous 5 years.

 

[LdiJ]

No, the deed change won't change the "long term" status.
Lidj will have to chime in here, but I would even assert you both get to use your $250,000 exclusion provided you both have live there as a principal residence for 24 months out of the previous 5 years.

I agree that they would both get their 250k exclusion...assuming that they would have enough capital gain for it to matter.

 

[Spammed]

Thanks a bunch. I was pretty sure it wouldn't affect it, but I was having trouble understanding how the IRS would define ownership and if it would be viewed as if she were recieving intrest as a trust. I feel much better now being i am only gonna profit about $40,000 with a $60,000 or less annual income it could be a pretty big tax hit for 09 had i been forced to claim it as taxable income. You guys on here seem very knowledgeable and quick to respond. I am impressed. It seems most message boards are pretty much filled with BS and people tooting their own horn more and more these days. Its nice to find some actual educated information on the internet like the old days. I wish i had more to offer in return on this board but i will hang around a while and try to be useful in some way. Thanks again