IRS Home Sale Exemption

Added March 4, 2008 by Ilyce R. Glink

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Summary: If you lost a spouse, do you still qualify for the $500,000 home sale exemption when selling your primary residence? A new law permits widowed spouses to take the married exemption if the house is sold within two years. The exemption allows sellers to keep $250,000 in profits tax-free or $500,000 if married.

Q: My father passed away in January. He and my mother owned a principal residence, which my mother may want to sell at some point in the near future.

Is my mother still entitled to the $500,000 home sale exemption on their principal residence?

A: Yes. A new law permits her to take his exemption if she sells at any time over the next 2 years. So, she'll be able to shelter up to $500,000 in profits as long as she has lived in the house for two of the last 5 years.

For more details, please speak to an estate attorney or real estate attorney.

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