Taxes on Selling the House

In many divorces, the assets are divided in such a way that the house has to be sold in order to split the cash gained from the sale. Because the house is often the largest single asset that a family will have, the other assets will not always equal the house in value and therefore the house will have to be sold to balance out the asset allocation.

There are some important tax consequences from the sale of the house, though, that must be considered. The general rule is that the income received from the sale of the home must be filed on the income tax return of both parties. If the house sells with a profit of $400,000 and the two sides split it equally, then they will each have to include the $200,000 income on their tax return and will pay normal taxes on it.

The exception to this rule is that they may be able to claim an exclusion for part or all of the income on the house. Each spouse can exclude up to $250,000, or double that if they file a joint return, that will not be included in the taxable income from the sale of the house. Of course, this means that they may not have to pay taxes on the house sale if they receive less than this amount.

Contact Us

If you are considering selling the house as part of a divorce, it is important to understand the tax implications brought about by that decision. For more information, contact the West Palm Beach divorce lawyers of Eric N. Klein & Associates, P.A. by calling 561-353-2800 for the assistance you need in this endeavor.