Divorce and sell home 2022

[Hlfalt89]

Sold house May 2022

Divorce finalized in Aug 2022

When filing should I file as single or married but separated?

Our divorce decree did not specify who could claim the house on taxes, is there any law in place to follow?

What is the law/rule on capital gains? Is there anything I could do to lower the percentage of capital gains that I will need to pay?

[Corrlich44]

HI Hlfalt89,

The rule is, the day your divorce decree states the official day, you are then SINGLE.

If you or the other Spouse did not live in the home in question for at least 6 months from the end of the year, and you are not officially divorced or separated, you are legally eligible to file as SINGLE on that year's tax return.

If the home was purchased as a family asset, the sale of the home would be reported on both parties personal tax return to assess how much the NET SELLING PRICE was greater or less than the ADJUST COST BASIS, including improvements. 

Since NET LOSSES on the sale of the home are not tax deductible, you can exclude up to $500,000 of Long-Term Capital Gains if both parties lives in the home at least 2 of the last 5 years from the sale date.