Question:  My wife died toward the end of 2008 and my son is now telling me that I won´t qualify for the $500,000 deduction when I sell our home because I needed to sell it in the same year that my late wife died. That is not fair! I had so many things to contend with plus the grief that is still with me. Will a call to the Internal Revenue Service help?

Answer:  No need to make any calls. There have been additional grieving spouses in your situation and the government included a provision for you and the other survivors in the Forgiveness Debt Relief Act of 2007. As of that date there is now a two year time period for you to sell your home.

Section 7 of H.R. 3648 (the debt forgiveness act) details the application of joint return limitation for capital gains exclusion to certain post-marriage sales of principal residences by surviving spouses.

Section 121(b) of the Internal Revenue Code of 1986 has been amended by adding a special rule for certain sales by surviving spouses.

In the case of a sale or exchange of property by an unmarried individual whose spouse is deceased on the date of such sale,  `$500,000' shall be substituted for `$250,000' if such sale occurs not later than 2 years after the date of death of such spouse and  the gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer's principal residence for periods aggregating 2 years or more.

Please consult your accountant or tax attorney for more information.