Level 6

Home Sale Exclusion for divorced taxpayers

Forum|Forum|3 years ago
February 15, 2023
2 replies
9 views

Hi, my client has been divorced for many years and recently sold the joint house. He hasn't lived in it for years. The ex-spouse has been living there. What's the best way to report this? Does the gain get split in half, he gets taxed LT gains and the ex-spouse gets the home exclusion?

ProSeries Tax

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rbynaker

Level 13

See if regs help:

https://www.law.cornell.edu/cfr/text/26/1.121-4

Camp1040

Level 10

irs.gov

Lots of info.

Separated or divorced taxpayers.

If you were separated or divorced prior to the sale of the home, you can treat the home as your residence if:

You are a sole or joint owner, and
Your spouse or former spouse is allowed to live in the home under a divorce or separation agreement and uses the home as his or her main home.

If your home was transferred to you by a spouse or ex-spouse (whether in connection with a divorce or not), you can count any time when your spouse owned the home as time when you owned it. However, you must meet the residence requirement on your own. If you owned your home prior to your marriage and after your divorce or separation, and your spouse or former spouse is not allowed to live in the home under a divorce or separation agreement, you count any time that you owned the home solely or jointly with your spouse as time when you owned it, and you must meet the residence requirement on your own.

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