MYTH – The maximum capital gain exclusion on the sale of a personal residence is $500,000.
Everyone knows that the maximum deferred capital gain on the sale of a home is $500,000, right?
Well, actually that’s wrong.
That’s the maximum excludable gain for a married couple that have lived in the home for at least 2 of the last 5 years.
But, there is more to the rule.
The maximum exclusion is $250,000 per person, for a married couple, if they both qualify, it is $500,000. But what if 3 people owned a home and sold it. Would they still be limited to $500,000 exclusion of the capital gain.
NO, not if each qualified for the exclusion.
As an example, if 3 siblings were on the title to a home and all 3 lived in the home for 2 of the last 5 years, they could each claim the $250,000 Section 121 capital gain exclusion on the sale of a personal residence for a total of $750,000.
The tax code can be subtle and is easily misread. You have to know the rules and follow them.
Let us help you with your real estate decisions.
Aurora Financial Services Inc
303-745-3962
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