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[Afeucht24]

Hi there! Reposting my question, as I posted two hours and haven't received a response.

I have heard about the capital gains tax and buying/selling a house within two years of owning it... 

Long story short, my ex-husband and I built our first home and moved in June of 2021. We separated in September of 2022, got divorced and sold our house in March of 2023.

I do not plan to buy another home in 2023. If I am subjected to the capital gains tax, what does that look like? Will both my ex-husband and I be subjected to the tax? We split the profit on our home 50/50.

• Does getting divorced effect whether we will be subjected to the capital gains tax?
• If we are subjected to it, how much can we expect to pay?
  • We split the profit 50/50 and both got a little over $18K. 
• My ex-husband's name was not on the mortgage, but was on the deed. Will he be subjected to the tax as well?

Any direction you can provide is much appreciated!

PS: Also, I'm in Northern Kentucky now. Bought/sold the house in Harrison, OH

[Katherine S 63]

Afeucht24,

Sorry for the long wait!  You are so smart to post again!!!

This link goes over all the ins and outs of home sales:

https://turbotax.intuit.com/tax-tips/home-ownership/tax-aspects-of-home-ownership-selling-a-home/L6t...

The main part to point out is the section on divorce.....

Special circumstances

Even if you don't meet all of these requirements, there are special rules that may allow you to claim either the full exclusion or a partial exclusion:

• If you acquire ownership of a home as part of a divorce settlement, you can count the time the place was owned by your former spouse as time you owned the home for purposes of passing the two-out-of-five-years test.
• To meet the use requirement, you are allowed to count short temporary absences as time lived in the home, even if you rented the home to others during these absences.
• If you or your spouse is granted use of a home as part of a divorce or separation agreement, the spouse who doesn't live in the home can still count the days of use that the other spouse lives in that home. This can come into play if one spouse moves out of the house, but continues to own part or all of it until it is sold.

The main part is that you most likely will qualify for the full $500,000 exemption.  If you are filing Single or Head of Household, you will enter your 1/2 of the sale price, expenses and cost of home (plus improvements).  I suggest going through the software and entering the sale of the home.  You will come to a section where you can enter an exception for the 2 out of 5 years.  If you qualify, the software will allow the full exemption.  Otherwise you will need to pay Long term capital gains on your portion of the gains.  In some situations if your taxable income is under a certain amount (see below), you will not pay any tax on the gains.

2023 Long-Term Capital Gains Tax Rates

Tax Rate	0%	15%	20%
Filing Status	Taxable Income
Single	Up to $44,625	$44,626 to $492,300	Over $492,300
Head of household	Up to $59,750	$59,751 to $523,050	Over $523,050
Married filing jointly	Up to $89,250	$89,251 to $553,850	Over $553,850
Married filing separately	Up to $44,625	$44,626 to $276,900	Over $276,900

To enter the sale of your main home in TurboTax:

• Open (continue) your return in TurboTax Online. (If your return isn't open, you'll need to sign in, click Take me to my return, then click Pick up where I left off.)
• Click My Account (top right of your screen).
• Select Tools.
• In the pop-up window, select Topic Search.
• In the search bar, type sale of home.
• In the results box, highlight sale of home, then click GO.
• You'll land on the Sale of Your Main Home page. Click Yes and follow the onscreen instructions.

Thanks again for reaching out again!!!!

Please give me a thumbs up if this was helpful.

Katie S.

[Afeucht24]

Thank you so so much, this was beyond helpful!