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Living on a Budget
by Sid Kirchheimer, AARP Bulletin, - September 2, 2008
You now have up to two years following a spouse's death to sell your jointly owned home and keep up to $500,000 in profits tax-free, thanks to a provision of the Mortgage Forgiveness Debt Relief Act signed into law last December. The change should allow recently widowed homeowners more time to grieve and better plan their future, instead of rushing a home sale to avoid paying more taxes. Previously, a home had to be sold the same year as a spouse's death to qualify for the $500,000 exclusion; widowed homeowners who waited two years were only eligible for up to $250,000. Any longer, they wouldn't be eligible at all.
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