Home-sale exclusion for a house divided — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Home-sale exclusion for a house divided

Get PDF file

by on
in Small Business Tax

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

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.

Related Articles...

Leave a Comment


Previous post:

Next post: