Not interested in moving in? You can also consider renovating the property and renting it out. However, if you and your spouse own two houses, you can each potentially separate $250,000 exclusions.” When only one spouse passes both tests, the maximum gain exclusion is only $250,000. The Internal Revenue Service says that if you’re married and file taxes jointly, you can exclude up to $500,000 of capital gains on real estate.Īccording to the MarketWatch Tax Guy column: “To qualify for the larger $500,000 joint-filer gain exclusion, at least one spouse must pass the ownership test and both spouses must pass the use test. I know it may be an annoyance, but if you live in the house for at least two years, your gains won’t be taxed under existing rules. If you want to avoid capital-gains tax on the sale of your mother-in-law’s home, the first and most straightforward option: You bite the bullet and live in the home, and not pay the tax man a single cent. If the house does sell for as much as the real-estate agent says, you’re looking at a gain of $85,000. You have multiple options to explore, assuming you have come to an arrangement with your mother-in-law and her long-term care after she moves out. ‘ The Big Move ’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.ĭo you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at. Will we be responsible for capital-gains tax? If so, what options do we have to avoid it? Thanks for your insight. A local realtor said they can probably sell it for $160,000. It’s in the process of being vacated and cleaned. I’m even afraid to walk in and see the mess. The home was purchased for $75,000 in 2005, but it was never kept up and it’s been neglected.
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