| p>There is a lot of turmoil involved when a couple | | | | no longer living there will not meet the |
| is going through a divorce. | | | | two-out-of-five criteria and so would be fully |
| If you're going through a divorce, you probably | | | | taxed on any profit made from a sale of the |
| don't want one more thing to think about. You | | | | home. |
| don't necessarily want to think about selling a | | | | A method to get around this tax is to have your |
| home, tax implications, or what needs to be done | | | | attorney stipulate in the final divorce papers that |
| when one spouse is still living in the home. Selling a | | | | you allow the other spouse to remain in the |
| house by itself also very stressful and you may | | | | house but your share must be paid for in full |
| not want to have to deal with this while you are | | | | when the time period is up. Or you can place |
| in the midst of a divorce. | | | | another time limit on it, such as when the children |
| However, the truth is that the house is probably | | | | reach a certain age. Doing it this way will go |
| the biggest asset you and your spouse own - so | | | | towards the non-resident spouse's time of being in |
| it's very important to think about who will get it, | | | | the house and will provide them with the full |
| or any proceeds from its sale. There are many | | | | $250,000 tax break. Your divorce attorney should |
| different scenarios that can play out in a divorce | | | | be aware of any state tax issues and be able to |
| that will affect this decision. | | | | assist you. |
| Potential Tax Benefits | | | | What If I Own a Vacation Home? |
| You may be eligible for a tax break if the home is | | | | If you and your spouse also own a second home, |
| sold while you are still married. | | | | either within Houston or outside of the city, and |
| To be eligible for the tax break, the couple must | | | | you or your spouse wish to make that their |
| still be married at the end of the year that the | | | | primary residence after the divorce, you can |
| house was sold. | | | | reach an agreement when you're diving the |
| Doing so (based on IRS rules at the time of this | | | | assets. |
| writing) will allow up to $500,000 in profit to be | | | | The $250,000 tax break will then still apply to the |
| excluded from federal capital gain taxes. A couple | | | | spouse living in the vacation home, provided that |
| may apply for this tax break if they file a joint | | | | they have not already used the two-out-of-five |
| tax return and if the home was owned by at | | | | criteria with the previous main residence. Should |
| least one person in the partnership two of the | | | | the spouse remarry and the new couple live in |
| five years beforehand. | | | | the vacation home together, after two years |
| You may also qualify for this tax protection if | | | | they will be eligible for the entire $500,000 tax |
| both partners used the home for two of the five | | | | break. |
| years before the sale. If you choose to file | | | | What's the Process of Selling My Home? |
| separately, each partner can still claim up to | | | | The actual process of selling your home during or |
| $250,000 on their tax return, provided that they | | | | after a divorce is no different than selling it for |
| still met the two-out-of-five years qualification. It's | | | | any other reason. |
| important to remember that when living in | | | | You still want to make sure that you put your |
| Houston,Texas there may still be taxes applied | | | | property on the Houston market as far in |
| from either the city of Houston or the state of | | | | advance as possible to allow for the most time |
| Texas. | | | | possible to arrange things such as closing dates. |
| What if One Spouse is Still Living in the Home? | | | | Because people can change their minds about |
| If the home is sold after the divorce but one of | | | | certain aspects of the settlement and other |
| the partners has been living there, they may use | | | | decisions that need to be made, put all agreed |
| the other spouse's time living in the house to | | | | upon dates in the selling documentation to ensure |
| meet the two-out-of-five criteria. | | | | that all parties will work to make the sale of the |
| The spouse that remained in the house | | | | home as easy as possible. |
| post-divorce may then sell it but they will only be | | | | You then want to make sure that the inside and |
| eligible for $250,000 due to the fact that they are | | | | the outside of the house are impeccable. Clear |
| no longer married. | | | | away the clutter, make any repairs that need to |
| However, if the spouse that remained in the | | | | be done, and give the house a very thorough |
| house after the divorce was to remarry and lived | | | | cleaning. This will make the home more attractive |
| in the home for two years after the new | | | | to potential buyers and help it to sell more quickly. |
| marriage, they may claim the full $500,000 when | | | | Selling a home in times of divorce is a very |
| selling because of the new spouse's time period in | | | | emotional ordeal. Find a Realtor that one (or both) |
| the house. | | | | of you can feel comfortable working with. Your |
| Things become a little more complicated when the | | | | Realtor should be able to assist you, bridge |
| couple has divorced, one spouse still lives in the | | | | communication between the two of you, manage |
| house, but it is still owned by both parties. | | | | most of the process and faciliate a smooth |
| In this case, after three years, the spouse that is | | | | transaction. |