Every home experiences some degree of movement over time, often called settling. It’s a natural part of the aging process for any structure, especially in areas with varying soil conditions, temperature swings, or after the first few years of construction. While minor signs of settling are usually no cause for alarm, some changes can hint at serious foundation issues that deserve immediate attention.

Knowing the difference between normal settling and foundation trouble can save homeowners and buyers from costly surprises and protect the value of the property.

Common Signs of Normal Settling

Minor cracks or imperfections often develop as homes adjust to their environment. These signs are usually cosmetic and not indicative of major structural problems:

• Small, hairline cracks in drywall, particularly around windows, doors, and at the corners of rooms.
• Doors or interior windows that stick slightly during humid months but operate normally as seasons change.
• Tiny gaps between moldings and ceilings or walls, which may appear as wood and drywall expand and contract.
• Fine surface cracks in concrete patios, driveways, or garage floors, usually caused by normal shrinkage over time.

If these issues appear but don’t worsen significantly, they are typically part of a home’s normal life cycle. Regular monitoring is recommended to ensure they don’t develop into bigger problems.

Warning Signs of Foundation Problems

In contrast, some signs point to more serious issues that may threaten the structural integrity of the home:

• Cracks larger than 1/4 inch wide, especially if they appear in stair-step patterns along brick or block walls.
• Horizontal cracks across foundation walls or basement floors, which may suggest pressure from soil or water.
• Noticeable sloping or uneven floors, where rolling objects don’t stay put or walking feels tilted.
• Persistent sticking of doors and windows, along with visible gaps around the frames even after seasonal changes.
• Separation between walls and ceilings or walls and floors, creating visible gaps.
• Detached cabinets or countertops pulling away from walls.
• Water intrusion in basements or crawl spaces, possibly from foundation movement allowing moisture to seep inside.
• Visible bowing or bulging of foundation walls from the outside.

These red flags should never be ignored. If you notice several of these issues, or if existing cracks worsen over time, it’s important to seek an evaluation by a qualified structural engineer or foundation specialist.

For homeowners, spotting issues early can help address problems before they escalate. For buyers, hiring a thorough home inspector�and asking questions about any visible concerns�is critical before finalizing a purchase.

A home is one of life’s biggest investments. By understanding the difference between everyday settling and foundation trouble, you can better protect your property, your wallet, and your peace of mind.

Losing a spouse is a deeply emotional experience and the financial decisions that follow can feel overwhelming. One important area to understand during this time is how the IRS treats the sale of a primary residence after the death of a spouse. Under certain conditions, surviving spouses may qualify for a larger capital gains exclusion, up to $500,000, if the home is sold within a specific time frame.

Here’s what you need to know.

1. The $500,000 Capital Gains Exclusion: The Two-Year Rule

In general, married couples who file jointly can exclude up to $500,000 of capital gains when selling their primary residence. For surviving spouses, this higher exclusion amount can still apply, but only if the home is sold within two years of the spouse’s death.

This special provision offers some breathing room for surviving spouses, allowing them time to make thoughtful decisions without immediately losing the tax advantage.

To qualify, the following conditions must be met:

• The home must be sold within two years after the spouse’s death.
• The surviving spouse must not have remarried before the sale.
• The couple must have owned and lived in the home as their primary residence for at least two of the five years prior to the date of death.
• Neither spouse can have excluded gain from the sale of another home within the two years before the current sale.

2. Step-Up in Basis: A Hidden Tax Benefit

In addition to the potential $500,000 exclusion, surviving spouses may also benefit from a step-up in basis. This means that the cost basis of the home, the amount used to determine capital gain, may be adjusted to reflect its fair market value on the date of the spouse’s death.

This step-up can significantly reduce or even eliminate capital gains taxes on the sale of the home, especially if the property had appreciated substantially during the couple’s ownership.

See an example below

3. Selling After Two Years: What Changes?

If the home is sold more than two years after the death of a spouse, the surviving individual is generally treated as a single filer and may only exclude up to $250,000 of capital gains�half the amount allowed under the two-year rule.

While the step-up in basis may still apply, the lower exclusion amount means that timing the sale could have a major impact on potential tax liability.

Important Reminders:

• The exclusion only applies to a primary residence; not to vacation homes, rentals, or investment properties.
• State tax laws may differ and should also be taken into consideration.
• Because every situation is unique, it’s wise to consult a qualified tax advisor or estate planning professional for personalized guidance.

For surviving spouses, the IRS offers valuable tax relief in the form of an extended capital gains exclusion and a possible step-up in basis. If you’re navigating these decisions after the loss of a spouse, understanding the two-year window and how the rules apply can help you maximize your financial outcomes.

Thoughtful timing and expert advice can make all the difference. For more information, contact your tax consultant. Your REALTOR� can help establish a fair market value at time of death and answer any marketing questions you may have.

Here’s a step-by-step example using your scenario to illustrate how the step-up in basis and the $500,000 exclusion work together for a surviving spouse:

Scenario:

• Original Purchase Price: $350,000
• Capital Improvements Over Time: $100,000
• Adjusted Basis Before Death: $450,000
• Fair Market Value at Date of Death: $1,150,000
• Home Sold by Surviving Spouse Within 2 Years: Yes
• Sale Price (assumed equal to FMV): $1,150,000

Step-by-Step Calculation:

1. Determine the Stepped-Up Basis

In most states, if the property was owned jointly and both spouses were on title, half of the property receives a step-up in basis to the fair market value at the date of death. The other half retains its original basis. (Note: in community property states, 100% of the property may receive a step-up. This example assumes a non-community property state.)

• One-half stepped-up to FMV: � � $1,150,000 = $575,000
• One-half retains original basis: � � $450,000 = $225,000
• Total Adjusted Basis After Death: $575,000 + $225,000 = $800,000

2. Calculate the Capital Gain on Sale

• Sale Price: $1,150,000
• Adjusted Basis (after step-up): $800,000
• Capital Gain: $1,150,000 … $800,000 = $350,000

3. Apply the Capital Gains Exclusion

Since the surviving spouse sold the home within two years, meets the ownership and use test, and has not remarried, they qualify for the $500,000 exclusion.

• Capital Gain: $350,000
• Exclusion: Up to $500,000
• Taxable Gain: $0

Result: Because the $350,000 gain is fully offset by the $500,000 exclusion, no capital gains tax is owed on the sale of the home. By taking advantage of the stepped-up basis at the time of the spouse’s death, and selling within the two-year window, the surviving spouse eliminated any taxable gain.