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Updated about 7 years ago,

User Stats

102
Posts
60
Votes
Raquel D.
  • Investor
  • Shakopee, MN
60
Votes |
102
Posts

Capital gains tax exemption for residence if recently married

Raquel D.
  • Investor
  • Shakopee, MN
Posted

My primary residence is worth almost 3x as much as what I paid for it in 2013.  I'm planning on selling in 2018 for a number of reasons, but the increase is going to leave me with a gain of around $300k.   I'm not married and therefore only $250k of that gain would be exempt from capital gains tax.  It's a good problem to have -- but I'm wondering if I can avoid it entirely.

I've been with my partner for going on 13 years, and we've intended on getting married for a long time, but just haven't really gotten around to it.  (Yes, I realize that sounds like a weak reason as I type it -- but neither of us ever wanted a wedding and being married wouldn't change much for us beyond tax filing status, so it wasn't a high priority on our list.  Going to a county courthouse is kind of like going to the DMV -- we don't want to go unless we absolutely have to.)  In hindsight, I realize taking care of this ages ago would've entirely negated this problem -- but hindsight is 20/20. 

So here's my question:  If we get married now and transfer title to the residence to both of our names, would we need to wait for him to be on title for 2 years in order to get the $500k exemption for a married couple?  If so, are there any exceptions that would shorten the period? Any arguments to be made to the IRS since he's lived here the entire time I have?   Thanks for any input! 

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