Your Life

Your Life

Major life milestones often have a major tax impact. Changes in your marital status, having a baby or adopting a child can have significant impact on your taxes. This is the place to ask questions about dependents, real estate, and other various scenarios that play a significant role in what taxes you pay.

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GJE
Pioneer
Posts: 2
Registered: ‎03-27-2016
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Recently married, each owned property - how do I file?

Hello, 

I recently married in October. Prior to marrying, my wife and I each owned our own condo. Once we married, we moved together into one property while the other remained vacant, was not leased, nor did we earn any income from it. What would be the recommended filing status? Married, filing jointly or seperately? How should we account for the 2nd property where we do not live?  

 

Thank you for the advice 

Tax Pro
Posts: 1,424
Registered: ‎09-04-2014

Re: Recently married, each owned property - how do I file?

Welcome to the Community.

I would suggest you file Married Filing Jointly as this is usually the best way to go.

If you can itemize deductions you will be able to subtract the mortgage interest and real estate taxes on both homes. 

If you file married filing separately, if one of you itemizes the other must also itemize. You would also not be able to use some of the credits available to those filing Married filing joint.

HRBlock has a neat tax estimator that can be used to try out both methods so you can choose the one that reaps you the biggest 

refund. You can find the tax estimator at www.hrblock,com/tax estimator. When the page opens scroll down to find the estimator. 

You can always stop by your local HRBlock office for advise or just post again with more questions.

Hope you enjoyed this Easter Day! 

BettyB
Sr. Tax Analyst
GJE
Pioneer
Posts: 2
Registered: ‎03-27-2016

Re: Recently married, each owned property - how do I file?

Thank you!

Pioneer
Posts: 2
Registered: ‎04-29-2016

Re: Recently married, each owned property - how do I file?

I am in a similar situation, My question is if there is anyway to get the individual exemption of 250,000 on capital gains if we sell one of the houses we owned before getting married.  We didn't live together until after we got married last year so my wife doesn't pass the "use" test in the expemption but we are not looking to get the joint 500,000 as the house would only probably net us a 100,000 gain. Is this possible if we file seperatly? 

Tax Pro
Posts: 5,723
Registered: ‎02-23-2016

Re: Recently married, each owned property - how do I file?

Hi jknorr,

 

Welcome to the community.

 

You do not need to file separately in order to get the exlusion for the home you sold, and in most cases I would recommend against filing separately to begin with because of all of the disadvantages that come with it.  If one of you meets the ownership requirment you both meet that requirement automatically.  However if one of you does not meet the residence test (in this case becaus you owned this house before the marriage and you were the only one that lived in it) that does not completely disqualify you from getting the exclusion.  It means that you are only eligible for a partial exclusion of up to $250,000 instead of the full $500,000 for a married couple.  If you have any trouble putting your partial exclusion into the software let me know.

 

Hope this helps you out.

Pioneer
Posts: 2
Registered: ‎04-29-2016

Re: Recently married, each owned property - how do I file?

In this case, filing jointly but only qualifying for partial exclusion up to 250,000 (which is more then enough!) my question is if we can sell the other property and also get a partial exclusion without having to wait out the two year window. For example:

 

My wife sells her property that she alone satisfy's ownership and use test in October 2017 for a gain less then 250,000. 

Then I sell my property that I alone satisfy ownership and use tests in June 2018 for a gain less then 250,000.  

 

Is this possible since we are not using the full married exemption on either home? Could it be done if we filled separately each year?

Tax Pro
Posts: 5,723
Registered: ‎02-23-2016

Re: Recently married, each owned property - how do I file?

Hi jknorr,

 

 

On this topic the IRS says that if you are married then you can claim 1 exclusion of up to $500,000 if neither spouse has claimed one in the past two years.  In addition, if one spouse meets the ownership requirement both are covered, but each spouse must meet the residence requirement individually.  So what that means is that if an exclusion is claimed for your spouse's property than you've claimed your exclusion for the next two years, however the amount is half of the maximum because only one of you met the ownership requirement.

 

The only way around this would be to file separate returns since everything is your own on a separate tax return.  Keep in mind though that filing using the married & filing separately status has lots of disadvantages, so you should take both of your entire separate returns versus your entire joint return into consideration and go with whichever option yields the better result.

 

If you have any other questions I'll be glad to help.

 

Louis,
Senior Tax Advisor (Tampa, FL)