Should you sell a home before or after your PA divorce? Tax Edition

Should you sell a home before or after your PA divorce? You’re getting divorced. You own a house together. You need to sell it. You know there’s probably going to be some tax consequences… What do you need to know? What are the consequences? AND When do you sell the house?

I specialize in divorce related listing and buying. I understand the challenges of selling your house due to a divorce…  Divorce… can be rough. Even when it’s amicable, it is stressful.  Let’s be real… getting divorced and selling your house, are probably the two most stressful things in life… and if you have to do both at the same time? It can be overwhelming. oftentimes the challenges are not with the sale of the house itself, but all the other stuff.

Yes, you want to address the situation and deal with it… but you should not move so fast that you miss the super important details, like this one.  Plus, by catching details like what I’m going to go into … you’ll both come out ahead with LESS STRESS

First, a disclaimer… I’m a realtor, not a professional tax accountant or a lawyer. Make sure you check with them for the exact details of your situation.

BUT Anytime you sell a house, and there is a profit made… you’re going to be hit with capital gains taxes if that profit is over a certain amount. In California, this tax rate is pushing 40%. That’s a lot of money… and when you’re selling due to a divorce. YOUR TIMING MATTERS.

WHY?

Because, in real estate, when you sell your primary residence, there is a capital gains tax exemption of up to $250,000 per person if you’re single. With married couples… each partner gets an exemption for a total capital gains tax exemption of $500,000.

It’s possible that if the house is sold after the divorce, you could lose a  $250,000 exemption ….  MEANING…  that there’s going to be an extra $100,000 in capital gains taxes.

Additionally, to get this exemption… you would have had to live in the house for TWO of the past FIVE years. If you’re filing together, or even filing separately, you can still get the $500, 000 tax exemption. BUT, If you’re filing separately, each partner can still claim their $250,000 tax exemption so long as you meet the “2 out of the last 5 years rule”

I don’t want anyone to make mistakes, or lose $100,000…  you don’t need more stress. BUT you should absolutely consult with someone before starting to do anything… the bottom line is that you want to preserve the entire capital gains tax exemption… so MAKE SURE TO PLAN out your  divorce and sale of the house so that the entire $500,000 exemption remains in place.

This is SUPER IMPORTANT.

Understanding the market that you’re selling in will guide some of your selling choices, Request one of my free market trend reports in the link below this video, and let me help you understand what kind of market you’ll be selling in 

If Should you sell a home before or after your PA divorce was helpful, Make sure to check out my resources for those going through divorce-related real estate transactions on the link below. Kimmy Rolph sells The Main Line and Local Areas. 

Taxes after Selling your Home During Divorce with PA Realtor Kimmy Rolph

Connect With Us!

If you're looking to buy or sell a property connect with us today!

How Can We Help You?

We would love to hear from you! Please fill out this form and we will get in touch with you shortly.
    (check all that apply)
  • This field is for validation purposes and should be left unchanged.

Leave a Reply

Your email address will not be published. Required fields are marked *