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Updated over 2 years ago on . Most recent reply
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Primary residence exemption on two properties
So the situation is my wife and I both owned houses before we got married and I believe we both would meet for two out of the last five year resident test. Can we both use 250 K exemption on our individual properties that we are now selling? If we file married but filing separately? Is there anyway anyone else knows to use 500,000 exemption on two properties? I have consulted professional tax advice and I believe I am being given incorrect information
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Quote from @Dave Foster:
@Thomas Hart, you can take $250K on each house (his and hers). Or you can take $500K on one house if you both lived in it for two years. But you cannot take both unless there is two years in between sales. The best way to handle this would be for the owner of the house you did not move into as a married couple to sell now and take $250K profit tax free. Two years from now you'll be able to sell the one you're in now and take the full $500K.
It is a two part test - ownership and residency.