The Tax Implications of Selling a House During Divorce

Divorce is a difficult process and navigating the tax implications of selling a home in the process can add additional strain. With the Tax Cuts and Jobs Act of 2017 further complicating the matter, it can be hard to know the best option for selling a home during divorce. Fortunately, there are a number of options that couples can consider when selling a home during divorce that can offer different tax implications. Hiring a real estate investor can be the best choice, as this can get you a fair cash offer without any fees that enables you to move on more quickly and focus on putting your life together.

Table of Contents

    Understanding Capital Gains Taxes Upon Selling a Home During Divorce

    Divorce is an emotionally and mentally taxing process, and selling a home during it can add additional strain. Navigating the complex tax implications of selling a home and understanding Capital Gains Taxes during a divorce can feel overwhelming. Thankfully, the Tax Cuts and Jobs Act of 2017 have put in place provisions that can help make this process easier. This includes deducting moving expenses and capital gains on houses owned prior to marriage. To ensure you completely understand your decisions and their tax implications, it is essential to consult with a tax advisor and divorce attorney. Are you considering selling your home? A real estate investor may be the best and most efficient route: they can provide you with a cash offer quickly, helping you to move on with your life.

    Capital Gains Tax on Real Estate and Tax implications of Divorce

    Impact of the Tax Cuts and Jobs Act of 2017

    The 2017 Tax Cuts and Jobs Act (TCJA) has drastically increased the tax liability when selling a house during divorce proceedings. For couples who filed jointly prior to the TCJA, there was a $500,000 capital gains exclusion which the TCJA doubled to $1,000,000. Upon divorce, they may choose to calculate the exclusion period when filing separately or jointly. Furthermore, the basis of the property is subject to adjustment according to each owner’s individual situation. Because of this, it is essential to consult with an experienced tax advisor and divorce attorney to determine the best-suited course of action. For many, the swiftest way to dispose of the house is to find a reliable cash buyer and quickly finalize the sale even during trying times.

    Understanding Basis Adjustments

    Divorcing spouses, whether joint owners or a single holder of a house, should understand the tax implications of selling the property. First, calculate a basis in the house and any gain or loss and make adjustments to the basis by factoring in capital improvements, such as a new roof, or account for prior depreciation taken. This basis impacts the amount of taxable gain or loss recognized when selling. Take into consideration the Tax Cuts and Jobs Act of 2017 as gains may be subject to capital taxation. Married joint filers are able to exclude up to $500,000 of gain from sale of primary housing, as long as they have owned and lived in it for two of the past five years. However, selling a house during a divorce can get complicated. To make an educated decision, get professional advice from a real estate investor and tax consultant to better assess your individual circumstances.

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    Calculating the Exclusion Amount for Married Joint Filing Status

    Selling a home during a divorce can complicate matters, but with the increased exclusion amount of the Tax Cuts and Jobs Act of 2017, married joint filers can receive up to $500,000 in capital gains tax relief. As single taxpayers also have an exclusion amount, filing jointly offers double the benefit. Perceptive divorcés can use this to their advantage and plan for the costlier task of splitting a home’s equity in two accordingly. With taxes on the mind, utilizing cash buyers can further benefit those going through a divorce, as it eliminates closing costs and other associated fees. By being mindful of the taxes that come with selling a house during a divorce, one can ensure to make the most of the financial aspects of this tumultuous time.

    Other Tax Considerations When Selling a House During Divorce

    Divorcing couples can experience a complicated and challenging process when selling their home. To make the most advantageous financial decisions, it is essential for them to recognize the potential impacts of the Tax Cuts and Jobs Act of 2017, as well as other yardsticks such as basis adjustments and capital gains taxes. Fortunately, some deductions like moving expenses are available. To gain these advantages, and ensure their financial protection, those selling a home during a divorce should find professional advice through a qualified divorce lawyer and a tax specialist. Additionally, they should carefully weigh the benefits of selling to a cash buyer, which can speed up the process while minimizing their longterm tax liabilities.

    Other Articles You Might Enjoy:

    Dividing the Proceeds from Selling a House During Divorce
    The Role of a Real Estate Agent in a Divorce Sale
    Tips for Keeping Emotions in Check When Selling a House During Divorce
    The Legal Process of Selling a House During Divorce
    Handling the Sale of a Jointly-Owned House During Divorce

    The Impact of Moving Expense Deductions

    Divorcing couples can qualify for moving expense deductions, alleviating some of the stress associated with relocating. Selling a home to a cash buyer may be the ideal way to achieve a timely resolution, especially if one of the parties needs to move out of state. Cash buyers offer uncomplicated, cost-effective transactions that are more efficient than using a realtor – and usually much cheaper.

    Calculating Capital Gains on Joint Property Held Prior to Marriage

    Divorcing couples can benefit from selling their home to a cash buyer: not only to avoid capital gains, but to gain the benefit of speed and low cost fees. Cash buyers provide fair market value and make the sale easy and efficient, giving couples an easy and reliable way to manage their joint property. But compliance with capital gains regulations is critical, so it is important to consult an expert, such as a lawyer or professional real estate investor, to ensure the process is done correctly. This way, couples can potentially save thousands in taxes and create a smoother transition into their new lives.

    Getting Professional Help During Divorce

    Divorce can be both an emotionally and financially trying process. To make sure your rights are defended and get the most return, it’s important to get reliable advice and help. Dave Ramsey recommends profesional help such as lawyers and real estate investors. They can help you quickly sell your home without hefty fees, often as a cash buyer. Additionally, there are numerous tax implications to selling during a divorce to consider, so you want to understand any changes that might take place as a result of Tax Cuts and Jobs Act of 2017, like basis adjustments and exclusion amounts. Moreover, make sure to look into other elements like moving expenses and capital gains on joint property held outside of the marriage. Taking all these issues into account is essential for making the best choice.

    ASAP Cash Offer - Call Now

    Call Now (818) 651-8166

    Why Sell Your Home to ASAP Cash Offer?

    1. You Pay Zero Fees 
    2. Close quickly 7-28 days.
    3. Guaranteed Offer, no waiting.
    4. No repairs required, sell “AS IS”
    5. No appraisals or delays.

    Working with a Divorce Attorney

    Dealing with the hassle of a divorce can be a challenge, but hiring a specialized divorce attorney makes it a much smoother journey. An attorney will offer professional support and advice for navigating through issues like asset division, custody arrangements, spousal support and selling one’s home. A cash buyer may be the most efficient way to close the sale, allowing both parties to finalize the divorce swiftly and without high costs. With the help of a divorce attorney, the process of ending a marriage can be as quick and painless as possible.

    Hiring a Real Estate Investor

    Selling your home during divorce can be a breeze when you work with a real estate investor. Many investors offer cash, so you don’t have to wait for a mortgage to be approved or cover closing costs. On top of that, they often offer to buy the property “as-is” so costly repairs and renovations are out of the equation. Save time and money when you let a realtor investor maximize your home’s profit potential.

    Get Professional Tax Advice

    Taxes must be taken into account while selling a house during a divorce. To get the best benfit of applicable deductions and marital exclusions, professional tax advice is recommended. The 2017 Tax Cuts and Jobs Act introduced changes that can substantially change the exclusion amount when filing as a Married Joint. Moving expenses can significantly reduce the amount of capital gains taxes owed, so be sure to consider these when budgeting. Do not forget to also assess capital gains on any property owned together prior to marriage. Hiring a real estate investor may be the most effective and efficient way to sell a house during a divorce. This option is fast, free, and most importantly, commission-free.

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