Certain Sales by Married Persons

This section explains how married persons figure their postponed gain in certain situations.

You may be able to postpone gain from the sale of your old home even if:

• You or your spouse owned the old home separately, but title to the new one is in both your names as joint tenants, or
• You and your spouse owned the old home as joint tenants, and either you or your spouse owns the new home separately.

You and your spouse can figure the postponed gain, which reduces the basis of the new home, as if the two of you owned both homes jointly. To do this, both of you must meet both of the following requirements.

• You used the old home as your main home and you use the new home as your main home.
• You sign a statement that says: “We agree to reduce the basis of the new home by the gain from selling the old home.”

Both of you must sign the statement. You can make the statement in the bottom margin on page 1 of Form 2119 or on an attached sheet. If either of you does not sign the statement, you must report the gain in the regular way, as explained in the following example.

Deceased spouse. If your spouse died after you sold your old home and before you bought and occupied a new home, you can postpone the gain from the sale of the old home if the basic requirements are met, and:

• You were married on the date your spouse died, and
• You use the new home as your main home.

This applies whether title to the old home was in one spouse’s name or held jointly.

Separate homes replaced by single home. If you and your spouse both had gains from the sales of homes that had been your separate main homes before your marriage, you may have to postpone the tax on both gains. This can happen if all of the following are true.

• You jointly purchase a new home.
• Each spouse’s share of the cost of the new home is at least as much as the adjusted selling price of that spouse’s old home. (Each spouse’s share of the cost of the new home is the part equal to his or her interest in the home under state law, generally one-half.)
• Each spouse occupies the new home within the replacement period.

Home replaced by two homes of spouses living apart. If you and your spouse sell a jointly-owned home and each of you then buys and lives in separate new homes, the postponement provisions apply separately to your gain and to your spouse’s gain.

You report the sale of your home as if two separate properties were sold. You each report half of the sales price.

Only one spouse buys a new home. Even if your spouse does not buy a new home within the replacement period, you still should report only your share of any gain from the sale of the old home. You postpone your share of the gain if you meet all the requirements to do so, even though your spouse cannot postpone his or her share.

If you and your spouse originally filed a joint return for the year of sale, you and your spouse must file an amended joint return to report your spouse’s share of the gain, which cannot be postponed. See Divorce after sale, under What To Report Now, later.

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