Legal Question in Real Estate Law in California

Hi. My wife and I own a home and we have been filing our taxes separately. We would like to sell our house in the near future. I understand in order to get the tax exemption for the full $500,000 we must be filing jointly. My question: for how long? If we start filing jointly next year and sell immediately after we file our taxes (as "jointly"), do we qualify for the $500k tax exception on the capital gains? Right now we could only get a tax break on $250k if I understand it correctly. Lastly, the "rollover rule" (getting a tax break on the sell of your house if you purchase another house of equal or greater value w/in 2 years), no longer exists, correct?

Many thanks,

James


Asked on 6/27/16, 9:08 am

1 Answer from Attorneys

As long as you both meet the ownership and use tests for the property (both own it and both use it as your principal residence for two of the past five years before selling) you only need file jointly in the year you claim the exemption. You are correct that the exemption replaced the rollover deferral which now only exists for investment properties via 1031 exchanges.

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Answered on 6/27/16, 10:40 am


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