When a house is owned jointly by two people and they sell it, how does the $1. 5 million primary residence exclusion work? Say the house is worth R3 million when they bought it and they sell it for R6 million -- then how much capital gains tax will they pay?
Each person is entitled to claim the half the exclusion in this case so R1m each as the exclusion is now R2m. Therefore the capital gain will still be R3m - R2m = R1m which is then divided by 2 for each person. Each person then gets an additional annual exclusion amount of R30 000 which means the gain included in their taxable income is R470 000 each.
Chrissays: 22 May 2015 at 10:18
Thank you! :-)
TaxTimsays: 22 May 2015 at 10:29
Only a pleasure!
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