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Old 12-26-2007, 04:34 PM
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Home sale cap gains in divorce non-resident

My fiancee separated from his ex in 2001. Their divorce was final March 2007 and she was living in the marital home until its sale earlier this month. My research shows he is eligible for the cap gain exemption, however; in 2002/2003 he removed his name from the mortgage, but not the deed. As he remained on the deed until the sale this month am I correct in interpreting that legally he is deemed to have been a joint owner to qualify for the CG exemption? All comments are appreciated.

Thanks!



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Old 12-27-2007, 10:25 AM
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You might be right on that point, it is the DEED that determines joint ownership and he too would be entitled to his share of Capital Gain Exclusion. I am not sure how they are filing their tax return, but, I suspect if they filed separate, both would report their 50% of the gain on their respective tax returns and elect to claim the 50% Capital Gains Exclusion available on residence.

Hopefully, they exclusion amount of $250,000 to each spouse would presumably offset any capital gains subject to tax, resulting in a Zero Tax due as far as gain on the sale of the principal residence.

Just a note, just check that they meet the Residence Test! Please refer to this article below.

Sale of Principal Home

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Old 12-27-2007, 04:11 PM
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Thanks! I checked the residency test and because his ex lived in the house for two of the last five years, he is deemed to meet the residency requirement since the divorce was final this year-- even though he didn't live there himself.



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