The Residence

Then comes the house… I look at the house as an investment. I want to know about the location, the interest on the trust deeds, the property taxes, and the maintenance costs. Since it's my mission as divorce professional to help couples make the transition from one family unit to two, it's often the house that's the issue where the financial considerations collide head on with the emotional agendas.

First of all, anyone is eligible to earn $250,000 in gain on the sale of a principal residence without paying capital gains tax every two years; a couple filing jointly can earn up to $500,000. A person must have lived in the house two out of the previous five years to qualify for this exclusion. Now, for the first time, a husband or wife who moves out and gives the ex-husband or wife exclusive use of the house under a divorce decree, can still qualify for the exclusion as if he or she continued to live there. Further, even if you are compelled to sell the house in less than two years from the date of purchase because of an unforeseen divorce, each spouse can claim a percentage of the $250,000 exclusion.

The government's rules are no longer an impediment to making a rational decision regarding the residence. Yet we're still faced with emotional attachments that often prevent or preclude a rational decision.