Q. My wife and I are getting a divorce. If we sell our house this year, can we qualify for the $500,000 home-sale exclusion?—R.W., Lorain, Ohio
A. It depends. Assuming you otherwise meet the tax-law requirements, you can claim the maximum $500,000 exclusion on a joint return if you are still married at year-end.
However, if you’re divorced at the end of the year in which your home is sold, the exclusion is limited to $250,000 for each filer. Remember that you must satisfy the “use” and “ownership” tests on your own to exclude your share of the gain from tax with your separate $250,000 exclusion.
Tip: In this down real estate market, you may be forced to reduce the selling price to ensure you’ve owned and used the home as your principal residence for at least two of the past five years.
- Small Business Tax Deduction Strategies No matches