The home sale gain exclusion can be tricky in a divorce. Generally, single taxpayers can exclude up to $250,000 of gain from the sale of a principal residence, while married couples filing jointly may exclude up to $500,000. To qualify, you must have owned and used the home as your principal residence for at least two of the five years before the sale and not have claimed the exclusion on another home sale within the previous two years. Filing status depends on whether you’re married at year end. A properly structured divorce agreement may allow a spouse who moves out to count the other spouse’s occupancy toward the use requirement and still qualify for the exclusion. Contact us for details.
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