Question

Matt and Opal were married in April of 2018. Matt has lived in his personal residence for fifteen years and Opal moved into the house after the marriage. Matt died in October 2018. Opal sold the house at a $300,000 gain in December, 2018. How much of the gain can Opal exclude?

Answer 1

Ans : A provision in IRS tax code that allows home sellers with profits on the sale of their primary residence up-to $ 2,50,000 if they are single or up-to $ 5,00,000 if they are married.

Federal tax code section 121(b)(4) provides that a surviving spouse will get the $ 5,00,000 gain exclusion if the residence is sold not later than 2 years after the date of death of the spouse and if all other conditions are met. (I. e., each spouse occupied the property for two years of the 5 years ending on the date of sale.' one spouse owned the property for two years of the 5 years ending on the date of sale. etc.)

In this case, Matt and Opal were married in April of 2018. Matt has lived in his personal residence for 15 years and Opal moved in the house after marriage. Matt died in October 2018. Opal sold the house at a $ 3,00,000 gain in December 2018.

Opal sold the residence within two years after the date of death of Matt. But, one other condition that each spouse occupied the property for two years of the 5 years ending on the date of sale is not met.

So, Opal can exclude $ 2,50,000 of the gain out of $ 3,00,000.