New Cap Gains for Residential Properties
Congress quietly passed a change to the capital gains rules regarding the sale of residential properties. Most Realtors can recite the rules in their sleep: provided the property has been used as a primary residence for 2 of the last 5 years, married sellers can exclude up to $500,000 of gain, while single sellers can exclude up to $250,000 in gain.
But what if your spouse dies? The old rule from IRS was that you had to sell in the same year that your spouse died in order to claim the $500,000 deduction. After that, you’re single and only get the $250,000 deduction.
Under the new law, you have up to 2 full years to sell after your spouse’s death to claim the $500,000 deduction. The official citation is HR 3648, Section 7.
Tupper
