• (978) 745-5551
  • Schedule Online
  • Client Portal
100 Cummings Center, Suite 542-K, Beverly, MA 01915
Law Office of Brandon L. Campbell
  • About
  • Practice Areas
    • Elder Law
    • Estate Planning
    • Special Needs Planning
    • Asset Protection
    • Pet Trusts
    • MassHealth / Medicaid Planning
    • Probate / Estate Administration
    • Guardianship & Conservatorship
    • Appeals and Appellate Representation
  • FAQs
  • Workshops
  • Blog
  • Contact
  • Menu Menu
Blog

The Tax Consequences of Selling a House After the Death of a Spouse

June 13, 2022/in Estate Planning

If your spouse dies, you may have to decide whether or when to sell your house. There are some tax considerations that go into that decision.

The biggest concern when selling property is capital gains taxes. A capital gain is the difference between the “basis” in property and its selling price. The basis is usually the purchase price of property. So, if you purchased a house for $250,000 and sold it for $450,000 you would have $200,000 of gain ($450,000 – $250,000 = $200,000).

Couples who are married and file taxes jointly can sell their main residence and exclude up to $500,000 of the gain from the sale from their gross income. Single individuals can exclude only $250,000. Surviving spouses get the full $500,000 exclusion if they sell their house within two years of the date of the spouse’s death, and if other ownership and use requirements have been met. The result is that widows or widowers who sell within two years may not have to pay any capital gains tax on the sale of the home.

If it has been more than two years after the spouse’s death, the surviving spouse can exclude only $250,000 of capital gains. However, the surviving spouse does not automatically owe taxes on the rest of any gain.

When a property owner dies, the cost basis of the property is “stepped up.” This means the current value of the property becomes the basis. When a joint owner dies, half of the value of the property is stepped up. For example, suppose a husband and wife buy property for $200,000, and then the husband dies when the property has a fair market value of $300,000. The new cost basis of the property for the wife will be $250,000 ($100,000 for the wife’s original 50 percent interest and $150,000 for the other half passed to her at the husband’s death).

To understand the tax consequences of selling property after the death of a spouse, contact your attorney.

https://www.northshoreplanning.com/wp-content/uploads/2022/06/pexels-pixabay-164522-scaled.jpg 1833 2560 [email protected] https://www.northshoreplanning.com/wp-content/uploads/2021/02/brandon-campbell-logo-300x90.png [email protected]2022-06-13 15:12:052022-06-13 15:12:10The Tax Consequences of Selling a House After the Death of a Spouse
Schedule a Call

100 Cummings Center Suite 542-K
Beverly, MA 01915

Phone: (978) 745-5551

Links

  • About
  • Practice Areas
  • FAQs
  • Workshops
  • Blog
  • Contact

Practice Areas

  • Elder Law
  • Estate Planning
  • Special Needs Planning
  • Asset Protection
  • Pet Trusts
  • MassHealth / Medicaid Planning
  • Probate / Estate Administration
  • Guardianship & Conservatorship
  • Appeals
© 2021 Law Office of Brandon L. Campbell. All Rights Reserved. Privacy Policy | Sitemap. Website Design by Compete Now.
Scroll to top