San Francisco Real Estate - Residential

Question about gains and principal residence

This came from the Sunday, January 7th SFGate column by Robert Bruss. To quote:

Q: I sold my principal residence in January 2006 with a capital gain of about $400,000. The same day, I bought another house using the profit as a down payment. I was single until April 2006. Mine was the only name on the title to the house that was sold. But my partner (now wife) and I had been splitting the mortgage payments for more than 24 months. It was our primary residence for more than two years before the sale. Can we file jointly and receive $500,000 capital gains tax deduction?

Tim C. - San Jose

A: You can file a joint tax return because you are now married. But that won't help you increase your Internal Revenue Code 121 principal-residence-sale tax exemption above $250,000. The fact you bought another house is irrelevant.

You are entitled to a $250,000 home-sale tax exemption under IRC 121 because you owned and occupied your principal residence more than 24 months during the last 60 months before its sale.

However, your partner who also occupied the primary residence cannot qualify for a $250,000 exemption, although she paid half of the mortgage payments, because she was not married to you at the time and her name was not on the title.

- SFGate

posted by SFResidence.com @ 7:56 AM