Congress Amends IRS Rule for Capital Gains Tax on Real Estate

Congress quietly amended the IRS rules governing capital gains taxes on real estate in its final session of the year. The news will come as welcome relief to those who have lost a spouse and face the dilemma of having to sell their home quickly in order to keep their $500,000 exemption.

Under the old guidelines, a surviving spouse had to sell their home by the end of the year in order to keep their entire $500,000 tax exemption intact. While in most cases, they still would not owe any capital gains taxes because they inherit the property under what is known as a "stepped up" basis, many widowers still felt pressured to have to deal with selling their homes during their time of grief.

Under the new rules, surviving spouses will have two full years to sell their homes and still qualify for the $500,000 capital gains tax exclusion. The new rule goes into effect immediately, so be sure to consult with your tax advisor for specific information concerning this change.

Gulf Coast Associates, Realtors® specializes in upscale Florida properties from Bonita Springs to St. Petersburg.

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