The Tax and Financial Consequences of Selling the Marital Home

3.92 (12 votes)

Recorded On: 01/18/2022

General Outline

1. General rule relating to tax exemption on sale

2. Home has been used as a rental or AirBNB.

       a.  Rented for 3 years, then couple moved back in, to qualify for exemption on sale.

        b.  2 of last 5 year rule

        c.  Reduction of exclusion rule and calculation.

         d.  Depreciation recapture.

3. Home has appreciated sufficiently to have tax due.

      a.  Divorce exception to 2 of last 5 year rule

            i.What if one spouse moves out, no written agreement.

            ii.What if one spouse moves out, with written agreement.

                    1.What the agreement must say about the home

      b. Sale after long separation

            i.Only one spouse has lived there 2 of last 5 years, but still filing jointly.

             ii.Only one spouse has lived there 2 of last 5 years, and filing separately.

4.  Financial consequences

      a. Expenses of existing house stop

     b. Mortgage on existing house is paid off from proceeds of sale.

5. Purchase of a New house 

6.  Rolling Proceeds of the marital home into a new home

7. Reinvestment of proceeds not rolled over into a new home

Daniel Caine

Founder, Family Law Software

Centerbase Software

Daniel Caine manages the Family Law Software engineering team at Centerbase Software.  Centerbase acquired Family Law Software in 2021.  

Family Law Software is the nationwide leader in financial software for divorce professionals, including lawyers, financial planners, mediators and accountants.

Prior to co-founding Family Law Software, Dan founded the company that created and developed the TaxCut income tax software.  In 1993, Dan’s company was acquired by H&R Block, and since then this software has been H&R Block’s desktop consumer tax software.

Dan graduated from Harvard Law School (JD 1982), from Harvard Business School (MBA 1982), and from Yale University, with a B.A. in Economics (1978).  The Association for Divorce Financial Planners awarded Dan its “Pioneer” award for contributions in the field of Divorce Financial Planning in 2011.

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Webinar Recording: The Tax and Financial Consequences of Selling the Marital Home
Recorded 01/18/2022
Recorded 01/18/2022 The fact that real estate markets have been appreciating quite dramatically in the past couple of years, and homes that previously would have been sold with no tax consequences will in fact incur tax consequences now. In addition, the rise in Airbnb rentals, which could also affect the gain upon sale of real estate.
Quiz: The Tax and Financial Consequences of Selling the Marital Home
10 Questions  |  1 attempt  |  7/10 points to pass
10 Questions  |  1 attempt  |  7/10 points to pass
Certificate
1.00 credit  |  Certificate available
1.00 credit  |  Certificate available