In California, how long do you have to be married to get the higher limit for capital gains? Does the spouse need to be on the title?

Question

In California, how long do you have to be married to get the higher limit for capital gains? Does the spouse need to be on the title?

Answer

You'll probably find your answer at http://www.nolo.com/legal-encyclopedia/avoid-capital-gains-tax-selling-home-29901.html.

Basically, a married couple filing jointly can exclude $500,000 of capital gains on the sale of a home belonging to either or both (as far as title goes), but it needs to be their primary residence. For a taxpayer filing alone, the exclusion is $250,000 -- thus having the effect of producing a different rate.

Note that the capital gain on selling a home isn't necessarily just the difference between the purchase price and the selling price. You can reduce the taxable gain even further by adding certain long-term improvement costs to your purchase price. Also note that the rules for a principal residence are somewhat different from the rules for other capital gains.