Selling a Home After a Spouse's Death

You will be limited to $250,000 of tax-free profit, not the full $500,000 a couple would get.

My husband and I bought our house together in the 1980s. He died four years ago, and I'm now considering selling our house. Will my capital-gains exclusion be $250,000 because I file my taxes as a single now, or $500,000 because I originally bought the house with him? It seems unfair that I would have the smaller exclusion because he passed away.

Because you do file as a single taxpayer, you will be limited to $250,000 of tax-free profit when you sell the home. But the taxable gain may be smaller than you imagine because part or all of the profit that built up while your husband was alive will be ignored by the IRS.

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.