Do I owe capital gains tax after divorce?


Q. When my husband and I separated, I was forced to leave our marital home. I was away from the home for eight months but returned to try to sell the property after he left. I’ve been there for three months now. The divorce settlement stipulates that he will receive the proceeds of the house but that any debt in his name only must be paid off. The house is on the market for about $300,000 and the mortgage is $192,000. There is also the real estate agent’s commission. Will we incur capital gains?
— Getting out

A. Despite the divorce and the fact that you were out of the home for some time, it seems you can still benefit from capital gains tax rules.

As long as the house was your personal residence and your husband’s personal residence for two of the past five years, there should not be any tax, said Michael Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston.

For the gain on a personal residence to be taxable, the net capital gain per spouse needs to exceed $250,000, he said.

“The gain is calculated by subtracting the cost of the property including the closing costs on both the purchase and sale along with the cost of any improvements from the selling price,” he said. “Loans are not part of the cost basis.”

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This story was originally published on July 19, 2019. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.