h1

A Very Congressional Christmas

December 29, 2007

Congress passed a favorable tax bill just before breaking for the holidays which has generous implications for real estate. A month ago if a couple, filing jointly, sold a principal residence they could exclude up to $500,000 in gain. Single filers could exclude up to $250,000. This is a huge chuck of change and a good reason people who buy homes below market value wait EXACTLY two years to sell them after living there. Heck, I know people who move every two years just to take the un-taxed gain! This was all well and good unless your spouse happen to die.

As if a spouse dieing weren’t hard enough, before this new bill was passed, Congress would have said, “We’re so sorry about the dearly departed Mr./Mrs. Smith, but if you want to exclude that $500,000 in capital gain you NEED to sell that home in the same calendar year that your dear old husband/wife died.” If your dearly departed left the living in November, you had a few weeks to get your home sold or else you would fall under the single filer status and only get to exclude $250,000 in gains. Besides grieving the loss of your soul mate, you would be grieving the loss of a $250,000 capital gains exclusion loss. Very rough indeed. The new law says this:

Surviving spouses now have a full two (2) years to sell their principal residence and still receive the full $500,000 exclusion before reverting to single filer status. That makes sense. Merry Christmas from Congress.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: