Selling marital home per divorce settlement

[parilljg]

Per divorce settlement the marital home will be sold on June 28th selling price $1,00,064.  The proceeds from the sale are to be split 50/50.  My former wife has been living in the home since the divorce in 2008.  I had been living in an apartment since the separation but purchased a home in May of 2021 for $650,000.   I am assuming I can defer the capital gains on what was my principal residence since the purchase price of my current home is  greater than my share of the selling price of the marital home.  Please advise.    

[STaxLady]

@parilljg 

Thank you for the question.

Unfortunately, there is not a provision to defer the gain on the sale of personal property, such as your former home. The "like-kind exchange" rules apply only to business and investment properties.

Because the property has been held for more than one year, any gain on the sale would be taxed at the long term capital gains tax rates, which are more favorable than ordinary tax rates.

You may find the following TurboTax article on selling real estate helpful.

https://turbotax.intuit.com/tax-tips/home-ownership/tax-law-for-selling-real-estate/L9PmDNkK5 

I hope that this answers your question.