Frisco, TX asked in Divorce and Tax Law for Texas

Q: Potential Tax Question: Got divorced in May 2016. Just sold the house - do my ex and I owe any taxes on the profit ?

Potential Tax Question: Got divorced in May 2016. As part of the divorce agreement the jointly owned house (owned for 22 years) was transferred to me via the Deed of Trust to Secure Assumption and Special Warranty Deed documents. Finally sold the home in Oct 2016 and my ex and I split a profit of $122K per our divorce agreement. Question is do either of us own any tax on that profit ? From what I've learned on the internet the answer seems like no, but wanted to be sure. Thanks.

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1 Lawyer Answer
Anton Pal Montano
Anton Pal Montano
  • Tax Law Lawyer
  • Bellaire, TX
  • Licensed in Texas

A: Yes, I would agree with your conclusion. As you may know, each of you individually may exclude up to $250,000 of the gain from the sale of your home from your taxable income if you meet the IRS's ownership and use tests. Generally, during the 5-year period ending on the date of the sale, you must have (1) owned the home for at least two years and (2) lived in the home as your main home for at least two years. Based upon what you've stated, it sounds like you have each met the ownership and use tests to qualify for the exclusion. However, you may want to consult with a tax professional if there are circumstances that might disqualify you from the exclusion. For example, your qualification for the exclusion might be in jeopardy if you had not lived in the home for at least two years within the last five years because the house was being used as a business or as rental property. Best wishes to you!

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