TAX CONSEQUENCES and TIMING: Selling a House during a DIVORCE in the San Francisco East Bay Area

TAX CONSEQUENCES: Selling Your House during a DIVORCE in San Francisco East Bay Area

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!

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