Comments on: Jerome Glasser Wins an A http://www.taxgirl.com/jerome-glasser-wins-an-a/ Paying taxes is painful... but reading about them shouldn't be. Fri, 10 Feb 2012 20:02:48 +0000 hourly 1 http://wordpress.org/?v=3.1.3 By: Mary Kay Foss http://www.taxgirl.com/jerome-glasser-wins-an-a/comment-page-1/#comment-10308 Mary Kay Foss Mon, 04 May 2009 02:38:28 +0000 http://www.taxgirl.com/?p=3310#comment-10308 One of the advantages of living in California (or another community property state) is that the value of the personal residence is revalued as of the date of the first spouse's death. Presumably the $250,000 exclusion would be enough to cover the gain from appreciation after the date of death even if the house is not sold within the first two years. In a common law state, there is a revaluation of the deceased spouse's interest in the family residence - one half if the house was held jointly and a full increase in value if the title was held entirely by the spouse that died first. I've tried very hard not to say "step up in basis" because there could be a "step down" based on current real estate values. The sad thing is that gain on the sale of a personal residence could be (partially) taxable, but a loss is not deductible. One of the advantages of living in California (or another community property state) is that the value of the personal residence is revalued as of the date of the first spouse’s death. Presumably the $250,000 exclusion would be enough to cover the gain from appreciation after the date of death even if the house is not sold within the first two years.

In a common law state, there is a revaluation of the deceased spouse’s interest in the family residence – one half if the house was held jointly and a full increase in value if the title was held entirely by the spouse that died first.

I’ve tried very hard not to say “step up in basis” because there could be a “step down” based on current real estate values. The sad thing is that gain on the sale of a personal residence could be (partially) taxable, but a loss is not deductible.

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