A:

According to Jared R. Callister, a former attorney-advisor to the United States Tax Court and current tax attorney for the California firm Fishman Larsen Goldring and Zeitler, because you've owned your home for more than one year, any gains will be treated as a long-term capital gain, and are subject to a preferred rate of just 15%.
However, that is not to say there are not possible exemptions, based on timing. For example, Callister says that home sellers who own and live in a home for a minimum of two years out of the prior five years may be able to exclude up to $250,000 of capital gains. Unfortunately, you do not currently meet those timing requirements, having owned the home for just 13 months, to date.

There is also the potential for eligibility for a partial exclusion, which applies if you were forced to move because of a change in your work location, due to health concerns, or because of some other "unforeseen circumstance." In this particular case, your marriage to a person who also owns a home is the so-called "unforeseen circumstance," but there is no simple answer as to whether the Internal Revenue Service (IRS) would recognize that as a qualifying event. Callister says that IRS regulations include general definitions and certain safe-harbor exceptions to define "unforeseen circumstance," which includes war, death and divorce. "Marriage, however, is noticeably absent from this list," says Callister. "As a result, you are left to rely on the general legal definition of an unforeseen circumstance, which is that the occurrence or event is one that you could not reasonably have anticipated before buying and occupying the residence." The definitive answer to your options ultimately depends on "the exact facts and circumstances surrounding the purchase of your home and, oddly, your marriage prospects at that time."

RELATED FAQS
  1. What unforeseen circumstances affect what I'll pay in capital gains taxes?

    The IRS has outlined some unique circumstances that could qualify you for a reduced capital gains tax exclusion. Read Answer >>
Related Articles
  1. Taxes

    Is It True That You Can Sell Your Home And Not Pay Capital Gains Tax?

    Based on the Taxpayer Relief Act of 1997, if you are single, the first $250,000 you make on your home sale is not subject to capital gains tax.
  2. Managing Wealth

    Buying a House Before Selling Your Own: Risks and Considerations

    Learn more about the financial risks and worst case scenarios associated with buying a home before selling your current residence.
  3. Taxes

    Will Your Home Sale Leave You With Tax Shock?

    Learn how the newest tax laws apply to the proceeds you earn.
  4. Taxes

    Do You Have to Pay Taxes on Home Sales?

    Taxes are only paid on home sales if your proceeds exceed a certain amount.
  5. Personal Finance

    7 Smart Steps Every New Homeowner Should Take

    Don't let the excitement of owning your own home lead you to make bad financial decisions.
  6. Taxes

    A Tax Primer for Homeowners

    Go beyond interest and find out how mortgage points affect your taxable income.
  7. Investing

    6 Signs It's Time To Buy A House

    Are you ready to buy a home? Find out if it's the right time for you to enter the real estate market.
  8. Investing

    First-Time Homebuyer's Guide

    Buying a home for the first time can seem daunting. Learn the buying process & what to watch out for in order to be a successful first time home buyer.
  9. Personal Finance

    Before You Remarry: Blending 2 Families' Finances

    Whether both of you are bringing kids into the new marriage, or just one of you, here are some smart solutions to preempt any financial tensions.
  10. Investing

    What Is the True Cost of Owning a Home?

    Buying a home is part of the American dream. But what happens when you add up all the costs associated with buying a home?
RELATED TERMS
  1. Main Home

    A term used by the Internal Revenue Service (IRS) to define the ...
  2. Equalization Reserve

    A long-term reserve that an insurance company keeps for the purpose ...
  3. IRS Publication 523

    A document published by the Internal Revenue Service (IRS) that ...
  4. Acquisition Debt

    A financial obligation incurred through the construction, improvement ...
  5. Long-Term Capital Gain or Loss

    A gain or loss from a qualifying investment owned for longer ...
  6. Marriage Penalty

    The increased tax burden for married couples compared to when ...
Hot Definitions
  1. Leverage Ratio

    Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to ...
  2. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  3. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  4. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  5. Mezzanine Financing

    A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing ...
  6. Long Run

    A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all ...
Trading Center