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Posted by LoTax on January 25, 2007, 3:02 am
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> Stuart A. Bronstein wrote:
>> An interesting question has come up. We've been doing a lot
>> of talking about the section 121 exclusion. But this is a
>> refinement we hadn't gotten to.
>>
>> A couple lived together in a house owned by one of them, for
>> five years. Then they sold. After the sale but before the
>> end of the year, they marry.
>>
>> How much of an exclusion do they get?
>>
>> By my reading of the statute, as long as they qualify to
>> file a MFJ return, and they both lived there for two years
>> out of five, they qualify for $500,000.
>>
>> I checked the regulations, but found nothing in there. In
>> Publication 523 it says,
>>
>> "You can exclude up to $500,000 of the gain on the sale of
>> your main home if all of the following are true.
>>
>> "You are married and file a joint return for the year.
>>
>> "Either you or your spouse meets the ownership test.
>>
>> "Both you and your spouse meet the use test.
>>
>> "During the 2-year period ending on the date of the sale,
>> neither you nor your spouse excluded gain from the sale of
>> another home."
>>
>> There's noting there to say that they have to be married on
>> the date of sale, only at the end of the tax year to qualify
>> to file a joint return.
>>
>> What do you think?From everything I've ever read or seen on bbs elsewhere, I
concur 100% with you, Stu.
There was a version of Section 121 - different from the one
that became law - that was introduced into the House of Reps
in 1997 that *did* include a requirement that the spouses be
married on the day the house was sold, in order to be
eligible for the $500,000 "joint return" exclusion. But
that bill did *not* get into the Code, it *died* in
Committee. There's a thread about it somewhere on the
internet.
Also, Bob Bruss, famous *real estate* [as opposed to *tax*]
columnist from the SF area wrote in his column last month
that the spouses have to be married on the day the house is
sold to be eligible for the "joint return" $500,000
exclusion. He was wrong about that but won't admit it.
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