Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Capital Gain or Loss

Ownership and Use Tests

Married Homeowners

The ownership and use tests are applied somewhat differently to married homeowners. Married homeowners can exclude up to $500,000 if they meet all the following conditions:

  • They file a joint return
  • Either spouse meets the ownership test
  • Both individuals meet the use test
  • Neither individual excluded gain in the two years before the current sale of the home

If either spouse does not satisfy all these requirements, the couple cannot claim the maximum $500,000 exclusion. The most that could be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. The couple must still file a joint tax return if married. For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. This calculation is outside of the scope of VITA/TCE.

Sale of Main Home by Surviving Spouse

Beginning with main home sales after 2007, the maximum exclusion ($500,000) by an unmarried surviving spouse is allowed if the sale occurs no later than 2 years after the date of the deceased spouse's death, and all other requirements are met.

A married couple.