you’re getting a divorce, you own a house together
and you need to sell it but you know
that there’s going to be
some sort of tax consequences involved…
and you don’t want to mess up!
so what do you need to know?
what are the consequences? and what does the timing of the sale of your property need to be?
hi my name is Tanja Odzak-Goppold and i’m a top producing agent here in Oakland and
the Greater East Bay Area.
I understand what it’s like to have to sell your house as a result of divorce
Divorce sucks and even when it’s been done amicably, it still sucks
selling your house and divorce are
probably the two most stressful things
that someone could have to do in life…
then to have to do both together
at the same time? it can be overwhelming.
The challenges that can be with selling your house in this situation
oftentimes have nothing to do with the sale of the house itself
but with everything else.
Yes, you want to address the situation and you want to deal with it
but you should not move so fast that you miss important details like this
because by catching these details you will both come out ahead and with less stress
First, a disclaimer i’m a realtor, i’m not a lawyer… i’m not a tax professional
so when it comes time for you to have to deal with this
please contact your lawyer or your tax professional to get the exact details for your situation
anytime you sell your house and there’s a profit made you can rest assured that
uncle sam is going to come after you
and if this profit is over a certain amount you’re going to be hit with a
capital gains tax so between the state of california and the federal government
this rate is pushing 40%
that is a lot of money and when you’re selling your house due to a divorce
your timing matters because in real estate when you sell your primary residence
you are eligible for a capital gains tax exemption
if you are a single person, you are eligible for a $250,000 capital gains tax exemption
if you are married, each partner qualifies to get a $250,000 tax exemption for a grand total of a
$500,000 tax exemption …
and it is very possible that if the house is sold after the divorce that one of those $250k capital gains tax exemption is going to be lost
and at a 40% tax rate between state and federal
that can be a hundred thousand dollars in capital gains taxes
additionally to get this exemption you need to meet the IRS rule of living in
the house for two out of the past five years and whether you’re filing together
or still separately you can still qualify to get that $500k capital gains tax exemption
but if you are filing separately you still need to meet that same rule of
having had lived in the house for two out of the past five years
i don’t want anyone to make any mistakes or have to pay a hundred thousand dollars in taxes
when you didn’t have to
nobody needs any more stress
but you should absolutely consult with your lawyer, your realtor, and your tax professional
before starting to do anything
the bottom line is that you want to preserve that $500k tax exemption
so plan your divorce and the sale of your house accordingly
so that $500k capital gains tax exemption remains in place
if you have any questions feel free to call me, shoot me a text, or send me an email!