Thu. Jun 8th, 2023

Q. My wife and I, equally seniors, have owned a household in New Jersey due to the fact 1988. Ten yrs ago we acquired a home in Florida. I retired, moved to Florida and grew to become a resident there. But my wife is effective in New Jersey, stays in New Jersey 11 months per 12 months and pays New Jersey tax. I have stayed in the New Jersey residence for 24 months for the duration of the earlier 5 years. If we are offering our New Jersey property, can we claim our New Jersey property as our most important home? Is it true that my spouse qualifies for $250,000 tax exemption versus gains when I do not qualify for the similar exemption?

— Uncertain

A. There are two tests 1 should move to qualify for the funds gains exemption.

In brief, you are proper.

Your spouse qualifies for the exemption, but you do not, said Laurie Wolfe, a certified economic planner and licensed public accountant with Peapack Private Wealth Administration in New Providence.

Here’s how the policies perform.

Taxpayers may perhaps exclude from revenue $250,000 value of cash gain related with the sale of their principal, or most important home if they fulfill two checks, Wolfe said.

A married few can exclude up to $500,000, or $250,000 each individual, she mentioned.

The two checks are the possession and utilization checks.

Initial you must figure out which home is your most important home, Wolfe claimed. You can only have one particular.

“A `facts and circumstance’ exam is utilised to establish which residence is your principal residence,” Wolfe stated. “This would be exactly where you commit the most time, in which your medical practitioners are positioned, in which you vote, in which you have a drivers’ license, and much more.”

In the scenario of you and your spouse, your primary house is in Florida and your wife’s is in New Jersey, she explained.

“We seriously could end suitable in this article simply because you indicated that Florida turned your principal home soon following 1988,” she said.

But let’s glance at the two exams anyway.

The first is the ownership examination.

“This take a look at says that you will have to have owned this house for at the very least 24 months out of the past 5 a long time with the conclude position staying the day of sale,” Wolfe claimed. “For a married couple who documents a joint return, only just one husband or wife need to meet this examination. You and your wife meet this very first examination.”

The next check is the usage examination.

“You each and every need to have used the residence as your residence for at the very least 24 months of the prior five decades,” she said. “These 24 months can happen anytime inside that 5-calendar year interval.”

Your spouse passes this check and you condition that you both equally fulfill the affliction that in the previous 60 months, you equally have lived in New Jersey for 24 months.

“So though you equally satisfy the ownership and use checks, the New Jersey property is not your principal, or principal, household and therefore, you are ineligible to exclude your 50 % of the gain on the residence,” Wolfe claimed.

You need to consult with a tax skilled who can go more than the specifics of your problem.

E-mail your inquiries to [email protected].

Karin Selling price Mueller writes the Bamboozled column for NJ Progress Media and is the founder of Follow NJMoneyHelp on Twitter @NJMoneyHelp. Locate NJMoneyHelp on Fb. Indicator up for’s weekly e-e-newsletter.