Newlyweds sell both former homes in 2022

[RLorgeEA]

Situation:  Newlywed couple each lost their spouses in 2021.  Found each other and remarried in 2022.  Each sold their homes owned with deceased spouses and they purchased a new home together in 2022.

Question:  How do I show that these are two separate principal residences so they each get the cap. gain exclusions?  Not a lot of cap gain for either one.  Is this possible?

Thanks in advance.

[Just-Lisa-Now-]

work through 2 separate Homesale Worksheets.

[Skylane]

They should each be entitled to 250k irc 121 assuming all other conditions apply to each. Edited to correct 

[sjrcpa]

If you remarry you can only get $250K. So each could get a $250K exclusion.

[qbteachmt]

They may only get a 250k exclusion, but make sure basis is adjusted for everything that happened and applies. That alone might result in nearly no gain.

[Skylane]

@sjrcpa Dec’d spouse within 2 years doesn’t apply?

[qbteachmt]

Pub 523:

"Widowed taxpayers.

If you are a widowed taxpayer who doesn't meet the 2-year ownership and residence requirements on your own, consider the following rule. If you haven’t remarried at the time of the sale, then you may include any time when your late spouse owned and lived in the home, even if without you, to meet the ownership and residence requirements."

Of course, they likely meet the 2 year residency requirement on their own. But it continues:

"Also, you may be able to increase your exclusion amount from $250,000 to $500,000. You may take the higher exclusion if you meet all of the following conditions.

1. You sell your home within 2 years of the death of your spouse;

2. You haven’t remarried at the time of the sale;

3. Neither you nor your late spouse took the exclusion on another home sold less than 2 years before the date of the current home sale; and

4. You meet the 2-year ownership and residence requirements (including your late spouse's times of ownership and residence, if applicable)."

[sjrcpa]

Not if you remarry before the sale. qbteachmt quoted the language.

[Skylane]

Thanks 

[taxes96786]

Did they remarry before the sale? That tells you whether they qualify for 250K or 500K each.