So I was curious about this scenario, because I think someone nearby did this.
1. A couple buys a SFH for $550k
2. Wife W does a quit claim deed
3. Years later (more than 2 years) Husband H sells property to Wife W for $800k.
4. Years later (more than 2 years) Wife W sells property to stranger S for $1.025million.
How much capital gains did Husband H and Wife W pay?
How much property tax does Wife W pay after Husband H sells the home to her?
So… in the first part, is it possible for husband and wife to file a joint return and still have husband sell property to wife? And if so, when husband sells to wife, is the capital gains exclusion $250k or $500k?
Transfers between spouses aren’t taxable, nor do they change basis. The gain between the original purchase and the last sale is under $500K, so no taxable gain.
I’m not sure, but I’m guessing that similar rules apply for the purpose of property tax assessments in California. Transfers between spouses don’t generally trigger re-assessments.
And one of the transfers, through a quit-claim deed, wouldn’t be a sale anyway. Under these circumstances, it would be a (probably) non-reportable gift. Gifts between spouses are eligible for an unlimited exclusion.
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