- quote -

Filing a joint return does not preclude each of them from
qualifying for their own $250K exclusion on each of their
own main homes.

--
Alan
http://taxtopics.net

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Old Car wrote:

- quote -

One can take a deduction for qualified mortgage interest
expense on a main home and a second home. If you live in a
home that has a mortgage as your main home, then you could
deduct the payments on two homes. If you live in the "free
and clear" home as your main home, then you could only
deduct the interest on the two other homes if you file as
married separate.

- quote -

Until you both can meet the 2 year use test for one of the
homes, the $500K exclusion is not available on that home.

- quote -

See the answers to #1 and #2. Move into one of the homes
that has a mortgage and use it as a main home for 2 years.
Sell it and use the $500K exclusion on the sale. During its
use as your main home you could deduct interest on 2 homes.
Then, move into either of the two remaining homes and use it
as the main home for 2 years, sell it and use the $500K
exclusion on that home. During its use, you would deduct the
interest.

- quote -

Yuch! See the answers above.

--
Alan
http://taxtopics.net

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

- quote -

Is it true, though, that each of them could take the $250K
exclusion on the home that he/she has lived in for the past
2 (or more) years, even if they file jointly? It appears
that they own the homes individually. I.e. Old Car could
sell the home he has been living in and take the $250K
exclusion, and his fiancee could sell her home and take the
$250K exclusion, assuming that each meets the 2-year
requirement.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

You can deduct the mortgage interest on two homes.
I'd suggest you pick the home you like least, live in it for
two years, and sell it for the $500,000 exemption. (Unless
the $250,000 exemption for one of you will wipe out the gain
on one of the homes?). Nan, EA in LA

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

I own one home free and clear. I am making payments on a
second home. My fiancee is making payments on her home.

After we marry, because we own 3 home, I assume:

1. We will not be able to deduct mortgage interest on the
both of the homes on which we currently are making payments.

2. If we sell one of the homes, we will not be able to use
the $500k capital gains exemption.

Is there a way we can marry, retain the 3 homes, and avoid
losing the tax breaks listed above?

One thought I had was to set up my "free and clear" home as
an asset of my business (corporation). The business would
not be deducting anything associated with the home
(utilities, taxes, etc.). Then we would be making payments
on 2 homes (primary and secondary residences), and if we
sold one of them we could take full advantage of the 500k
capital gains exemption.

Any info or comments about this would be appreciated. Thanks.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >