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Two years to sell with the joint amount.

A surviving spouse keeps the $500,000 exclusion for a sale within two years of the death, on top of the step-up in basis. Enter the home's cost, its value at the death, and the sale, and see what is excluded, what is taxable, and how the answer changes past the window.

§ 121 and § 1014 · Last reviewed September 6, 2026 · Facts · The table · Methodology

https://consideratecapital.com/tools/home-sale-exclusion-surviving-spouse

What the home cost

The purchase price plus what you spent on improvements over the years.

What it was worth when your spouse died

The market value on the date of death. An appraisal from around that date is the usual source.

Sale price

Months from the death to the sale

Inside the 2-year window, so the $500,000 married-couple exclusion still applies.

How the home was held

Jointly with my spouseIn my spouse's name aloneCommunity property (not Illinois)In my name alone

Your spouse's half resets to its value at death. Your half keeps its original cost.

Did you or your spouse own it and live in it for two of the last five years?

Yes, two of the last five yearsNo, but the move was for work, health, or an unforeseen eventNo

Taxable gain on the sale

$150,000

Only the gain left after the exclusion is taxed. The home's cost for tax purposes, its basis, is $550,000 after the death, so the gain on this sale is $650,000. The exclusion then takes $500,000 of that off, the full married-couple amount, because the sale is within 2 years of the death. The same sale after the window would leave $400,000 of gain taxable.

Federal tax on the taxable gain: $22,500 to $35,700; At the 15% rate, or at 20% plus the 3.8% investment surtax
Time left in the 2-year window: 6 months; $500,000 exclusion until then, $250,000 after
Gain erased by the step-up at death: $350,000; Never taxed, to you or to anyone

Two rules work together. The step-up resets the cost of your spouse's share of the home to its value at death, so only the gain since then, plus the gain on your own share, can be taxed. The exclusion then takes $500,000 of that gain off if you sell within 2 years of the death, and $250,000 after that. The window runs from the date of death to the date of sale. Remarrying before the sale ends it.

This follows the federal home sale exclusion for a surviving spouse, stacked on the step-up in basis at death. It assumes a long-term gain, no depreciation from a home office or rental use, no years when the home was not your main residence, no other home sale exclusion in the prior two years, and no state tax. In Illinois a home held jointly with a spouse steps up by half, which is what the joint choice above does. Educational, not advice.

This is a simplified model, not your actual tax return or plan. It only knows what you type in, leaves out rules that may apply to you, and cannot weigh the other facts and trade-offs a real decision depends on. Before you act, talk with a professional who knows your whole situation.

Built by Joshua Mangoubi, CFA, MBA. By using this tool you agree to the tool terms, which include that results vary with each use and over time. Cite this tool, or take a table or chart

How it counts. The stepped-up basis from the step-up engine already on this site, then the exclusion for the survivor's situation (the joint amount inside the window, the single amount after, prorated for a forced early sale), and the gain computed both ways from the statute.

What it assumes. A home used as the principal residence with no rental or home-office years, no prior exclusion, and no remarriage before the sale. Depreciation recapture and nonqualified use are the CPA's adjustments, and the closing date against the two-year mark is worth a calendar check before the listing.

Where we fit in. We integrate tax considerations into your investment strategy and collaborate with estate attorneys and CPAs to ensure your plan is coordinated. We are not a law firm or accounting firm, so we do not provide legal or tax advice. Everything in this material is for educational purposes, based on primary sources. Before taking any action, please consult the appropriate professionals to apply these ideas to your situation.

The facts, in one place.

Six quotable sentences on the home-sale exclusion after a spouse dies.

Gain on the sale of a principal residence owned and used for two of the last five years is excluded up to $250,000, or $500,000 on a joint return (§ 121(a), (b)(1), (b)(2)). The amounts are statutory and have not changed since 1997.
A surviving spouse keeps the $500,000 for a sale within 2 years of the death, if the couple qualified for it just before the death and the survivor has not remarried (§ 121(b)(4)). One day past the window, the amount is $250,000.
The deceased spouse's ownership and use count as the survivor's (§ 121(d)(2)), so a home the couple lived in for years qualifies even if it was titled in one name.
The exclusion stacks on the step-up in basis. In Illinois a jointly held home steps up by half at the first death; the survivor's gain is measured from that new basis, and the exclusion applies to what remains.
Example: a home bought for $200,000, worth $900,000 at the death, sold for $1,200,000 eighteen months later. The new basis is $550,000, the gain $650,000, $500,000 excluded, $150,000 taxable; the same sale at 30 months would have $400,000 taxable.
A sale before the two-year use test is met, forced by work, health, or unforeseen circumstances, earns a prorated exclusion: the months of use over 24, times the full amount (§ 121(c)). A death in the family is among the unforeseen circumstances the regulations name.

The exclusion, by when the survivor sells.

The amount available in each situation.

Exclusion of gain on a principal residence for a surviving spouse, by time since the death and by the use test (§ 121)
Situation	Exclusion	Authority
Joint return, both qualified	$500,000	§ 121(b)(2)
Survivor sells within 2 years of the death, not remarried	$500,000	§ 121(b)(4)
Survivor sells more than 2 years after	$250,000	§ 121(b)(1)
Survivor remarries and sells on a joint return with the new spouse	$500,000 if the new spouse also meets the use test	§ 121(b)(2)
Use test not met; sale for work, health, or unforeseen circumstances	Months of use ÷ 24 × the amount above	§ 121(c)
Use test not met, no such reason	None	§ 121(a)
Deceased spouse's years in the home	Count as the survivor's	§ 121(d)(2)

How the window works.

Gain on a home owned and lived in for two of the last five years is excluded up to $250,000, or $500,000 on a joint return. A widow or widower who sells alone would ordinarily have the single amount, but the statute gives them the joint amount for a sale within two years of the death, as long as the couple qualified for it just before the death and the survivor has not remarried. The deceased spouse's years in the home count as the survivor's, so a home in one name still qualifies.

The exclusion sits on top of the step-up in basis. At the first death, the deceased spouse's share of the home takes its value that day as its basis, so the gain the survivor measures is only what has built up since, plus the gain on their own share. The exclusion applies to that smaller figure. Inside the two-year window, a great many sales owe nothing; a day past it, the amount halves. A sale before the use test is met, forced by work, health, or an unforeseen event, earns a prorated exclusion rather than none.

Methodology.

Inputs. The cost, the value at death, how the home was held, the sale price, the months from the death to the sale, and whether the two-of-five-year test is met (or, if not, whether the sale was forced and for how many months the home was owned and used).
The basis. From the step-up engine already on this site: all of the home for one held in the deceased's name or as community property, half for a joint tenancy between spouses (§ 2040(b); § 1014(b)(9)), none for one in the survivor's name.
The exclusion. $500,000 for a sale within two years of the death (§ 121(b)(4)), $250,000 after (§ 121(b)(1)); prorated by months of use over 24 for a forced sale before the use test is met (§ 121(c)); none otherwise.
The gain. Sale price less the new basis; the excluded part is the smaller of the gain and the exclusion; the rest is long-term gain, taxed at 15 percent, or 20 plus the surtax, shown as a range. The same sale past the window is computed for comparison.
Validation. A sale inside the window, the same sale outside it, the 24-month edge, a forced sale at 12 months (half the amount), and a sale with no use and no reason. A transcription error fails the build.
Not modeled. Depreciation recapture from a home office or rental years, periods of nonqualified use, a prior exclusion within two years, remarriage before the sale, installment sales, and state tax. Educational, not advice.

Sources.

1. United States Code (Cornell LII), 26 U.S.C. § 121 — Exclusion of gain from sale of principal residence. The two-of-five-year ownership and use test (a); the $250,000 limit (b)(1) and $500,000 on a joint return (b)(2); the surviving spouse's $500,000 for a sale within two years of the death when the joint conditions were met at death (b)(4); the reduced exclusion for a change in employment, health, or unforeseen circumstances, prorated over two years (c); and the tacking of a deceased spouse's ownership and use (d)(2). Retrieved September 6, 2026; verified September 6, 2026.
2. United States Code (Cornell LII), 26 U.S.C. § 121(b)(5) and (d)(6); § 1(h)(6) — Nonqualified use; depreciation; unrecaptured section 1250 gain. That gain allocated to periods of nonqualified use after 2008 is not excluded, allocated by the ratio of those periods to the ownership period (b)(5)(A), (B); that use after the last use as a residence inside the five-year window is not nonqualified (b)(5)(C)(ii)(I); that gain up to the depreciation taken after May 6, 1997 is never excluded (d)(6); and that such depreciation gain is taxed at up to 25 percent (§ 1(h)(6)). Retrieved September 6, 2026; verified September 6, 2026.
3. Internal Revenue Service, Publication 523, Selling Your Home. The Service's worked statement of the eligibility test, the joint and surviving-spouse amounts, the partial exclusion, and the basis of a home received from a spouse or held jointly at death. Retrieved September 6, 2026; verified September 6, 2026.
4. United States Code (Cornell LII), 26 U.S.C. § 1014 — Basis of property acquired from a decedent. That property acquired from a decedent takes the fair market value at the date of death as its basis (a)(1); that the surviving spouse's half of community property takes it too when at least half the property was includible in the decedent's estate (b)(6); and that property included in the gross estate by reason of its form of ownership, such as a joint tenancy, is treated as acquired from the decedent (b)(9). Retrieved September 6, 2026; verified September 6, 2026.
5. United States Code (Cornell LII), 26 U.S.C. § 2040 — Joint interests. That one-half of a qualified joint interest between spouses (tenancy by the entirety, or a joint tenancy with right of survivorship held only by the two) is included in the decedent's gross estate (b); and that a joint tenancy with anyone else is included except to the extent the survivor can show they furnished the consideration (a). Retrieved September 6, 2026; verified September 6, 2026.

Revision history.

The record's history.

September 6, 2026: Added the nonqualified-use and depreciation rules for the rented-home sale tool.
September 6, 2026: First release: the exclusion available to a surviving spouse by time since the death, stacked on the stepped-up basis, with the partial exclusion for an early move.

Canonical address: https://consideratecapital.com/tools/home-sale-exclusion-surviving-spouse

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