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Updated over 8 years ago,
Selling two "primary" residences and excluding capital gains?
This question has become a little more challenging than I originally expected - CPA's & tax experts watch out!
My fiance and I each lived and owned our own homes for more than 2 years. My name was on my deed and her name on her deed. She moved in with me, rented her home out (for less than 3 years) and then we got married. We recently sold my home and according to IRS pub 523, we're ok to exclude any capital gains taxes (it's a primary residence I lived there for 2 years alone, less than $250k in gains).
Here's the catch
We want to sell her home now, but I'm not sure if we can avoid the capital gains on her home. The only reason being that we refinanced her home and I was added to her deed.
1) If we sold her home and filed taxes separately, can we exclude capital gains for both properties since they were both primary residences?
2) Can we file together and exclude capital gains for both properties?
Thanks for any insight you can provide
Pete