Florida Divorce & Taxes – Sale of Marital Home


Florida divorce can cause all sorts of tax issues. Often your major asset is the marital home. That's our tax subject today.

Federal law allows up to a $250,000 ($500,000 in the case of a married couple filing a joint return) exclusion of gain realized on the sale or exchange of a principal residence if you have owned and occupied a principal residence for at least two of the five years prior to sale. If you and your spouse file a joint return for the year of the sale, you can exclude the gain if either spouse meeMPj03994970000[1]ts the ownership tests.

You are considered to have used the property as your main home during any period when you owned it, and your spouse or former spouse was allowed to use it under a decree of divorce or separation.

The following is excerpted from IRS Publication 523:

Transfer to spouse.   If you transfer your home to
your spouse, or to your former spouse incident to your divorce, you
generally have no gain or loss (unless the Exception,
discussed next, applies). This is true even if you receive cash or
other consideration for the home. Therefore, the rules explained in
this publication do not apply.

If you owned your home jointly with your spouse and transfer your
interest in the home to your spouse, or to your former spouse incident
to your divorce, the same rule applies. You have no gain or loss.

Exception.   These transfer rules do not
apply if your spouse or former spouse is a nonresident alien. In that
case, you generally will have a gain or loss.