CCH Federal Taxation Basic Principles
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Lynne had used her exclusion on June 30, 20x3, within two years preceding the December 31, 20x3 sale.
(Note: If they had sold Greg’s rental home instead of their jointly-owned principal residence, a $250,000 exclusion would have been available on their joint return. Greg would still be considered to have owned and occupied the rental house as his principal residence during two of the five years preceding sale, i.e. the two years preceding marriage. He would not have had to wait two years from June 30, 200x3, (the effective date of Lynne’s exclusion) to become eligible because a non-owner-spouse’s ineligibility does not bar the owner-spouse from claiming a $250,000 exclusion on a joint return.)
Sale of Home by Married Taxpayers
Chapter 11, Exhibit 3d