Divorce and taxes in Mississippi are complicated. Divorcing couples will need to address a lot of issues, including marital asset division. As their family home may be their greatest asset, selling it during their divorce may be a thought they will have in mind. But, before spouses move forward, they have to understand the tax implications of their decision. An experienced attorney in Ridgeland will guide them through the sale process to make sure the couple reduces any capital gain taxes on their family home’s sale.
Home Sale and Taxes During a Divorce
A $250, 000 tax exclusion may apply to the capital gains a couple receives when they sell their family house. The couple may be able to exclude up to $500, 000 in capital gains if they file jointly. But, this can get complicated during a divorce and the couple has to consider a lot of details. For instance, both spouses must have lived in the house as their main residence for a minimum of two of the last five years and they should only get $500, 000 or less profit from the home sale to take advantage of the tax exemption. Also, a spouse may forfeit their eligibility for the tax exclusion if they remarry. Because of the many considerations to keep in mind, it is in the best interest of a divorcing couple to work with a lawyer.
How to Best Approach a Home Sale During a Divorce
If one of the spouses won’t keep the family home after divorce, it is best to sell their house sooner in the divorce process. Over time, an unfinalized divorce can become more contentious and financially complicated. The couple might not be able to collect on the full tax exclusion because of the time component. They should consult a reliable lawyer to help make sure they make the most out of their tax exclusions.
Divorce is already complicated and when compounded with the issue of selling the family house, things can become more emotionally and financially complicated. Indeed, the majority of spouses are more invested in their family house than just a dollar amount. If you are in the middle of a divorce and planning to sell your family home, you should let a family attorney help you address your issues, including the tax implication of the sale. Your lawyer will help you gain a better understanding of your legal options and look for a solution that works for your situation.