In my work in real estate law, I often see how divorce brings emotional and financial challenges at the same time. When a shared home is part of the picture, the decisions you make – and when you make them – can have lasting financial consequences.  

One issue that frequently catches people by surprise is capital gains tax. Understanding how timing affects tax exposure can help limit additional financial loss during an already difficult transition. 

How Capital Gains Can Come Into Play 

When a married couple sells a primary residence, they may qualify for a capital gains exclusion of up to $500,000, provided certain requirements are met. But if the home transfers to one spouse during the divorce and that person sells the property after the divorce is finalized, that exclusion is typically reduced to $250,000.  

Why Timing Matters 

For couples whose homes have appreciated over and above that amount, it would likely be more advantageous for both partners to sell the property before the divorce is finalized, and negotiate how the proceeds of the sale will be distributed as part of the divorce proceedings. That way, there are more proceeds from the sale to divide up. 

Moving Forward With Care 

There’s no one-size-fits-all approach when a marriage ends. Every situation is different, and the right decision depends on your financial picture, your goals, and your timing. If you’re navigating divorce and considering what to do with a shared home, understanding the legal and tax implications early can help limit financial loss and support a smoother transition into what comes next.  

If you’re going through a divorce and plan to sell your home, get in touch for a consultation. I can work with you and your divorce attorney to help ensure you’re set up for a legally smooth and tax efficient sale of the property, so you can start your next chapter off on the right foot.