HOW DOES ONE HANDLE CAPITAL GAINS TAX ON A HOUSE IN A DIVORCE?
In order to determine whether you will have a tax liability when the marital home is sold, you should familiarize yourself with the IRS tax rules on the sale of a home. Currently, the IRS allows married couples to exclude up to $500,000 of the gain and individuals to exclude $250,000 from their taxable income. In order to qualify for this exclusion, your home must be your primary residence and you must have owned and occupied your primary residence for at least two of the last five years prior to the sale. To figure the gain on the sale of your home you will need to know your basis. For most people, it is the original amount you paid for your home. However, if you have made any improvements or taken any deductions then you will need to calculate your adjusted basis. For example, if the original cost of your home was $200,000 and you added a $10,000 pool, your adjusted basis becomes $210,000. If you then took an $8,000 loss for a flood, your adjusted basis becomes $202,000. To calculate
