The Tax and Financial Consequences of Selling the Marital Home

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Includes a Live Event on 01/18/2022 at 1:00 PM (EST)

Recorded On: 10/19/2021

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

Daniel Caine is a Massachusetts-based attorney and is an active founder of Family Law Software, Inc., along with Wendell Smith, both of whom were also partners in the company that developed the critically-acclaimed and best-selling income tax software program “TaxCut,” which was sold to H&R Block, and who continue to market the product today.

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The Tax and Financial Consequences of Selling the Marital Home
01/18/2022 at 1:00 PM (EST)   |  60 minutes
01/18/2022 at 1:00 PM (EST)   |  60 minutes 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.
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