First, the widow or widower or the deceased spouse must have owned the sold property for at least two years prior to the spouse’s death. The couple must also have lived in the house for at least two years prior to the death. Finally, the capital gains exclusion must not have been claimed by either spouse in the two years before the death.

What are the rules for capital gains exclusion for widows?

The qualifying rules for a capital gains exclusion for widows and widowers differ slightly from the standard rules since one spouse is deceased and cannot meet the standard eligibility requirements. First, the widow or widower or the deceased spouse must have owned the sold property for at least two years prior to the spouse’s death.

What should I do with my money as a widow?

As tempting as it may be to charge ahead, however, new widows should postpone making major — and irreversible — financial decisions for six months to a year, said Alexandra Armstrong, a certified financial planner in Washington. Those decisions include selling a house, lending money to relatives or paying off a mortgage.

How long does a deceased spouse have to live in a home to be considered a widow?

If the deceased spouse lived in the home for two years or more while the surviving spouse lived in it for less than two years, the IRS considers the time spent in the home by the deceased spouse as time the widow or widower lived in the home.

How does the widow’s property tax exemption work?

However, this is rarely the case. The benefits of a widow’s exemption vary widely from state to state. Basically, this is how a widow’s exemption works: it is most commonly a discount on the home value for assessing taxes, not on the tax burden itself.

Are there capital gains tax breaks for widows and widowers?

When the home is a personal residence, capital gains tax breaks allow for a set dollar amount of capital gains to be excluded from taxation. The rules are generally the same for widows and widowers as they are for everyone else. Capital gains tax breaks only exclude a portion of the gains for properties worth more than a certain dollar amount.