I had an email this morning asking me about Capital Gains tax. A conversation about Capital Gains would have been different just a week ago since Congress just a made an important change that's going to make a big difference to a lot of my senior clients.
Here's a quick refresher course on Capital Gains:
You are exempt up to $250,000 if you're single; and exempt up to $500,000 if you're married and filing jointly and have used the property as your primary residence for 2 or more of the last 5 years.
Here's the kicker that negatively affected a number of seniors. When a spouse dies, the IRS then considers you to be a single person, and you're only eligible for the $250,000 exemption unless you sell the house within the same year your spouse died. So, if your spouse died in November of 2007, you have until December 31, 2007 to sell and close on the house to be eligible to claim the $500,000 exemption.
Here's the good news. Congress just passed a law (H.R.3648 Section 7)that now gives the surviving spouse two years to sell the family home and still qualify for the $500,000 exemption.
How nice to start the New Year with a post that reflects an age-sensitive change in our tax law. We're off to a good start!
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