Question

Sale of Primary Residence Divorce

Forum|Forum|1 year ago
February 19, 2025
1 reply
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I was divorced by the end of 2024 after we sold our home March of 2024. I saw the prior comments about allocating half of everything in the filing, but my xhusband took $150k off the top of the home proceeds as a separate property interest because he claimed to have applied an inheritance to pay down debt 10-12 years prior. It seems by the logic applied to what I have seen in the discussion that I can just show the allocated proceeds that I received in the calculation of gain. The property purchase and improvements were made with commingled funds.

S

SabrinaD2

Yes, you should likely calculate your gain based on the proceeds you actually received. If your ex-husband took $150,000 as his separate property interest, you would use the remaining proceeds allocated to you for your gain calculation. Given the complexities, consulting your attorney is advisable as it is important that the legally binding information in the divorce document is followed.

Here are some key points to consider:

Capital Gains Exclusion: If you and your ex-spouse both used the home as your primary residence for at least two of the five years before the sale, you can each exclude up to $250,000 of the gain from your taxable income
- If you acquire ownership of a home as part of a divorce settlement, you can count the time the place was owned by your former spouse as time you owned the home for purposes of passing the two-out-of-five-years ownership test but not the residency test

For additional information see resources here and here.