Many Michigan residents are homeowners. Many Michigan residents are also in the process of ending their marriages or thinking about doing so. Some former couples will want to sell their marital homes, split the profits and move on with their lives right away. Others may wish to continue living together for the time being. Either way, a divorce law attorney may offer guidance on how one can reap the tax benefits associated with selling the marital home.
Current tax laws allow any person or couple to exclude so much of the profits from selling a home from their tax filing. A couple or former couple who files jointly may exclude up to $500,000. If each party wishes to file separately, then each may exclude up to $250,000.
In order to reap this tax benefit, each party will need to meet a residency requirement. As of Oct. 2018, this requirement states that a person must live in the primary residence for two out of the last five years in order to qualify for the tax exclusion. Sounds easy enough, but it is certainly something to keep in mind if one decides to move out of the residence before the property is put up for sale.
When selling a home, wanting to keep any profit from it is understandable. The government allows a way for people to do just that, but divorce can complicate this if either party is not careful. A divorce law attorney can assist Michigan residents as they work toward divorce settlements and figure out what to do with their significant assets — such as the marital home.