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by CareyBot

DEAR BOB: My wife and I are in a second marriage for each of us. We live in her house, which is in her name only. If we sell the house, would we be entitled to the $500,000 principal residence sale tax exemption or just $250,000? Frank F. DEAR FRANK: I have very good news for you and your wife. Internal Revenue Code 121 specifies that a husband and wife filing a joint income tax return in the year of their principal residence sale are entitled to a tax exemption up to $500,000 even if title is held in one spouse's name only. Purchase Bob Bruss reports online. However, both spouses must meet the occupancy test, which requires an "aggregate" two out of the last five years principal residence occupancy. If you both meet this occupancy time test and file a joint tax return in the year of the ...