Surviving Homeowners Can Outsmart the ‘Widow Tax’—but You’re Fighting the Clock

After losing a spouse, most widowers are hit with a cavalcade of financial questions that need answers. For those who own homes, the biggest tends to be whether to sell the family home or stay put. Given the importance of generational wealth—and the amount of young people banking on their folks to leave them the family home in order to become homeowners themselves—holding on to the home seems to be the common course of action. But then comes the dreaded “widow tax” to contend with, if you change your mind or you’re forced to sell. Fortunately, you have some options—and two years to make all the big decisions you need to. What is the widow tax?The "widow tax" is what financial experts usually refer to as the federal income tax burden a surviving spouse experiences when moving from a "married filing jointly" filing status to a "single" status.Also known as the “survivor's penalty,” the surviving spouse has a limited amount of time to make certain financial decisions under the expectations of a married couple. When it comes to your home, this includes the capital gains tax. “A surviving spouse may still qualify for the $500,000 capital gains exclusion if the home is sold no later than...