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Tax Law (Questions About Taxes)/Capital gain exemption on primary residence

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Question
Thank you for taking my question.

My wife and I have joint ownership of our primary residence in Virginia that we bought 10 years back. Capital gain on the expected sale of the house is $100,000.

I have been employed in Canada residing there since 2012 while my wife our son continue to reside in our house. I have been filing my NR1040 for income from rental property I own in Virginia has been filing 1040 return.

When we sell the house, can my wife claim in her tax return, the entire $100,000 as capital gain exemption?

If she will not be able to claim the entire $100,000, will I be eligible to claim capital gain exemption in my tax return in the US based on the consideration that the house is deemed as our primary residence (and that I moved to Canada for employment reason)?

Answer
Ryan,

Thanks for your question.

Each of you get half the gain in the sale of the house. Your wife can exclude her share of the gain, as the house has been her primary residence for 24 of the past 60 months. If you lived in the house for 24 of the past 60 months as your primary residence, you can exclude your portion of the gain. However, keep in mind that the test for primary residence is fact based - you must have actually lived there more than half the time during that period for it to be primary.

Hope this helps.

John Stancil, CPA  

Tax Law (Questions About Taxes)

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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