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Level 3
February 3, 2026

sale of home from divorce

  • February 3, 2026
  • 1 reply
  • 4 views

divorce was final in June 2022. Taxpayer had moved out in May 2021. Ex spouse was suppose to either refinance in her name or sell the property. She did neither and house was foreclosed and finally sold in  August 2025. Is the taxpayer entitled to the home exclusion as he was paying the RE taxes but not the mortgage. House was purchased about 13 years ago for $163,000 then sold for $280,000  Not quite sure how to handle as the ex spouse did not follow the divorce decree. Thanks for any help you can give me

    1 reply

    BobKamman
    Level 15
    February 3, 2026

    I recently had a client who qualified for the exclusion 25 years after the divorce decree, that allowed his ex to live alone in the jointly-owned property until she decided to sell it.  

    IRS Pub 523

     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 isn’t allowed to live in the home under a divorce or separation agreement, you can count any time that you owned the home, solely or jointly with your spouse, as time when you owned it. However, you must meet the residence requirement on your own.

    ms856nickAuthor
    Level 3
    February 3, 2026

    Thank you so much for the quick reply. I believe that my client would meet the criteria for the exclusion after reading your reply. I appreciate your help