divorced house still hanging

[Possi]

Hey,

I have an issue with my impending divorce and our house. We have decided that my ex will live in, and continue paying for our house rather than split it and walk... for various reasons.

The mediator said that I might have cap gains problems when we finally sell it and suggested I consult those more professional than I am, in this arena.

We have owned it jointly for 29 years.

If we change ownership to "joint tenants with rights of survivorship" will I be liable for cap gains if I wait more than 2 years to sell the house? Although it will not have been my main home for that time, I am still half owner and if something happens to him, I inherit the house.

I will not buy or own another house until then. I am renting and will continue renting.

If there are tax consequences, I'll have to put it in writing that he must buy me out before that time frame runs out. In fact, I have not lived there for 2 years already, but there also has been no legal separation, so my apartment is considered the second home as long as we are married.

Help?

Thanks for any words of wisdom...

~donna

[Snaggletooth]

His Residency counts

There is a provision that if he remains in the house, it is counted the same as YOU remaining in the house for purposes of the exclusion.

I don't know whether the new rules that came with the $7500 credit tamper with this or not, but my guess is that you are O.K. and can take the exclusion when your ex-husband
sells the house.

More explicit details are in the Tax Book.

[Possi]

thanks for the reply

Thanks for that reply. A friend said the same thing, but the friend is not a tax pro.

blessings,
~donna

[Possi]

plain as the nose on my face

There is a provision that if he remains in the house, it is counted the same as YOU remaining in the house for purposes of the exclusion.

I don't know whether the new rules that came with the $7500 credit tamper with this or not, but my guess is that you are O.K. and can take the exclusion when your ex-husband
sells the house.

More explicit details are in the Tax Book.

Page 12-11 Column 2.

I guess I was doubtful because this is a weird situation altogether.

[ED SMITH]

Changing the form of title is not going to change the requirements for the Sec 121 exemption. You have not lived in the house for 2 years and in one more year your $250,000 exemption will be gone. There are grounds for an exception because of legal separation or divorce, but you have been separated for two years and the exception might not apply, because the separation is not legal.

I think that the best course of action is to sell the house and keep everything on as amicable a basis as possible without a court ordered setllement. If he wants to keep it, He will suggest buying you out.

Putting demands that he buy you out before a drop-dead date could cause problems. He would have to qualify for a new mortgage based solely on his income. If he can't, then the only option is to sell the house.

[joanmcq]

Ed's wrong. As Snag says, there is a provision for divorce that if one ex stays in the house and both own it, the exclusion is good for both. each gets 250K when sold. But I'm not sure what would happen if you bought and sold in the meantime (I'm in the same situation, but I'm the ex in the house.)

[Davc]

Ed's wrong. As Snag says, there is a provision for divorce that if one ex stays in the house and both own it, the exclusion is good for both. each gets 250K when sold. But I'm not sure what would happen if you bought and sold in the meantime (I'm in the same situation, but I'm the ex in the house.)

The usual rules would apply. Unless an exception is met, you may only exclude once every two years.