Question

Do my spouse and I have to be married during the 24 months of residential use to take the $500,000 exclusion when we sell in 2026?

Answer

No.

The tax code never asks how long you have been married. It asks what your tax return looks like for the year you sell.

To claim the $500,000 exclusion on a 2026 sale, you need all five of the following to be true:

1. You and your spouse file a joint return for the tax year of the sale.

2. Either you or your spouse meets the 24-month ownership test (24 months of ownership during the 60 months ending on the date of sale).

3. You used the residence as your principal home for 24 of those same 60 months.

4. Your spouse separately used the residence as his or her principal home for 24 of those same 60 months.

5. Neither you nor your spouse excluded gain on another home sold during the two years ending on the date of this sale (the exclusion is available only once every 24 months, and use by one spouse taints the other).

Look at that list again. Not one requirement says the 24 months of use have to fall inside the marriage. Your spouse’s months in the home count whether they happened before the wedding or after it.

The Wedding Date Does Not Matter, but the Joint Return Does

Because the $500,000 amount hangs on filing a joint return for the year of sale, and because your marital status for filing purposes is fixed on the last day of the tax year, the marriage can come after the closing and still work.

Example. You own and live in the home for eight years. Your fiancée moves in on January 1, 2024. You sell the home on June 30, 2026, at a $480,000 gain. You marry on November 14, 2026. You file a joint 2026 return.

You meet the ownership test, both of you meet the 24-month use test (she has 30 months), and neither of you used the exclusion in the prior two years.

You exclude the entire $480,000.

What Happens When Only One Spouse Passes the Use Test

You do not lose everything. If you and your spouse flunk the $500,000 requirements, the limit becomes the sum of the exclusions you and your spouse would have qualified for had you not been married.

So the spouse who meets the ownership and use tests still brings $250,000 to the table, and the spouse who falls short brings zero. The couple excludes $250,000 and pays capital gains tax on the rest.

Planning point. If your spouse is a few months shy of 24 months of residence, push the closing date. Buying three or four months can be worth up to $250,000 of tax-free profit, which is real money at the likely 15 percent, 18.8 percent, 20 percent, or 23.8 percent rates that would otherwise apply.

Planning point. If the sale is forced early by a job change, a health problem, or an unforeseen circumstance, you may still claim a prorated exclusion rather than nothing at all.

The 2026 Numbers Are Still $250,000 and $500,000

Congress set these dollar limits in 1997 (almost 30 years ago) and never indexed them for inflation, and 2026 brings no increase.

However, there is hope for an increase in the limit. Three congressional bills to change the limit are pending:

1. The bipartisan More Homes on the Market Act would double the limits to $500,000 and $1 million and would index them going forward.

2. The No Tax on Home Sales Act would eliminate the cap entirely on a principal residence.

3. The Middle Class Home Tax Elimination Act would also eliminate the cap entirely on a principal residence.

Key point. Don’t count on Congress. Plan your 2026 sale on the law as it exists, with the $250,000 and $500,000 exclusions.

Three Traps That Shrink the Exclusion

• Non-qualified use. Periods after 2008 when the home was not the principal residence of you or your spouse create a pro rata slice of gain that can cut the exclusion. Rental or vacation use before you moved in is the usual culprit because such use is “not principal residence use.”

• Depreciation. If you sell your home, the part of your gain equal to depreciation allowed or allowable after May 6, 1997, for a home office or for any period you rented out the home can’t be excluded, and it’s taxed at a maximum rate of 25 percent.

• The 24-month clock. One exclusion per couple per 24 months. A prior sale by either spouse can wipe out the second $250,000. But the tax code does allow you to elect out of the exclusion.

Widows and Widowers Keep the $500,000 Exclusion for Two Years

If your spouse dies, you may still use the $500,000 amount on a sale that closes no later than two years after the date of death, provided the joint-return requirements were satisfied immediately before the death and you have not remarried.

Takeaways

• The length of your marriage is irrelevant to the $500,000 exclusion.

• What counts is a joint return for the year of the sale.

• Both spouses need 24 months of use in the last 60 months. Only one spouse needs 24 months of ownership.

• If one spouse falls short, you drop to the $250,000 exclusion, so consider delaying the closing.

• For 2026, the limits remain $250,000 and $500,000. Do not plan on Congress enacting the pending bills.