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How taxes might impact your divorce

On Behalf of | May 25, 2023 | Divorce

If you sell your Florida home for a profit, you may trigger a taxable event. However, this depends on a couple of factors such as whether you were married when the sale happened and how long you and your spouse owned it. Single filers who meet IRS criteria qualify for a principal residence capital gains tax deduction of up to $250,000 while married couples qualify for a $500,000 exemption.

Sell before the marriage ends

Your filing status is determined by your marital status at the end of the calendar year that the return covers. For instance, if you were filing your 2022 return, your filing status would be single if you were no longer married at the end of 2022. In such a scenario, you would qualify for the $250,000 exemption if you sold your house and got divorced during that year. However, if you waited until January 2023 to divorce, you would qualify for the $500,000 exemption if the house was sold in 2022.

Keep the house in the divorce

As long as you remain in the house for at least two years following your divorce, it may be possible to qualify for a larger exemption in the future. If you were to remarry, you would be entitled to the full $500,000 exemption in the event that the house was sold after your second marriage took place.

A home is often the most valuable asset a couple possesses. Therefore, the ability to avoid paying capital gains taxes may help you save thousands of dollars that can be used to support yourself as a single person. Of course, there is still a chance that you’ll receive alimony or other resources from your spouse in a final divorce settlement.