Selling my rental house have a tax question

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Selling my rental house have a tax question

Ian Russell
Real Estate Investor · San Jose, CA · Member since 2017 · 47 posts · 24 votes

I am selling my house awhich was my primary residence.  I moved out last year and began renting it out.   I understand that I can take up to 250,000 tax exemption if I am single or a 500,000 tax exemption if I am married.  I got married last November but I am the only one on the title of the house.  Do I need to put my wife on title to get the 500,000 tax exemption or since we are now married we qualify?  thanks

Ian

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    8y

    @Ian Russell , 

    Are you asking this because you gain is more than 250k?

    The $500,000 exclusion applies even if only one spouse meets the ownership test. However, both spouses must meet the use test. I dont think your spouse meets the use test. 

    If one or both spouses meet the ownership test, but only one spouse meets the use test, a $250,000 exclusion is available. 

    Also, keep in mind about the depreciation recapture tax of 25% on the depreciation you took while it was rented.  Everything else is excluded if you are under 250k. 

    Since we dont have your numbers, I wanted to tell you that If your gain is more than 250k and your AGI exceeds 200k, you have additional 3.8% of the portion of the gain that is not excluded. 

    if you could give us numbers, we could help better. 

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  • Marian Smith
    Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
    8y
    The gain would be your sales amount minus purchase price, selling costs and any capital improvements you made over your ownership. Congrats if you have over 250k in gains.
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  • Ian Russell
    OP
    Real Estate Investor · San Jose, CA · Member since 2017 · 47 posts · 24 votes
    8y

    Sorry I should clarify the price and it might help.  I bought the house in 2011 for 388,000 it will sell for probably around 840,000.  The house is in my name but I got married last year.  Just trying to figure out how much exemption  I will get.

    thanks

    Ian

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