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What About Mothers Exclusion |
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Dear Edith: I know that homeowners now get something like $200,000 each for husband and wife for exemption on sale of their principal residence. My father recently passed away, so what happens to his $200,000 half of the exemption, does that get passed on to my mother, so when she sells she gets a $400,000 exemption for she and my Dad? They have had that house since 1958 in an expensive area and you can imagine the increase in value, but with her alone now, she will be wanting to sell it eventually |
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If your mother sells within the year of your father's death, she gets to use a full $500,000 exclusion from capital gains tax. Otherwise, she can claim $250,000 in tax-free profit. But there's something else involved. Her cost basis for the house may have changed--become higher-- when your father died. This depends on the way they owned the house and the state she lives in. I trust she's consulting an attorney about your father's estate, and that's the person to tell her where she stands. |
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Edith
Originally published on December 6, 2006 |
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