Capital Gains on joint owned home with ex-spouse buying new home

[Rhiannon99]

I have been divorced for over 5 years. My ex-spouse and I have continued to co-own the house we bought in 1990 as our main residence. He has continued to live there, and I moved to a different state 5 years ago.  We are now selling that home and buying a new home, which will continue to be his main residence. I have no plan to live there, and he will be responsible for all upkeep and mortgage on the new home. 

My share of the profit on the sale of the original home would be $150,000 (50 % of the profit).  All of the profit will be used for the purchase of the new home. As I have not lived in the home recently, I am looking at the potential of a large capital gains tax. My income is less than $42000 / year. 

Is there some way I can avoid paying a large capital gains tax?  It was suggested I could sign a Quit Claim prior to the sale being finalized. Or to have a 1081 form used, but it was unclear whether it would work in this situation.  Thanks!

[MarilynG1]

The tax on a Long Term Capital Gain for your income of 42K is $0, so don't worry about capital gains increasing your tax due. 

Here's more info on How Capital Gains are Taxed

Don't forget to deduct 50% of the Sales Expenses from your Sales Proceeds, too.

[Rhiannon99]

Wouldn’t my income for 2024 then be $190,000 because the $150,000 Capital Gains on the home would be considered part of my overall income? 

[JamesG1]

Do you have a local tax professional that you trust?  

Make an appointment and have pro forma 2024 tax return prepared to see how your tax return will be impacted by the sale of your former home.  Then you will be able to plan accordingly.

It does not sound like you would qualify for the sale of home exclusion because you did not live in the home for two of the last five years before the sale.  See also this.

@Rhiannon99