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Selling the Marital Residence: What Are the Tax Implications?

By Melvyn B. Frumkes

The marital residence is frequently the most valuable asset found in most divorce cases. Issues of valuation, possession and sale will all involve tax implications. The residence may include a houseboat, a house trailer or the house or apartment that the taxpayer is entitled to occupy as a tenant-stockholder in a cooperative housing corporation. It does not include personal property that is not a fixture. Treas.Reg. '1.121-1(b). Any gain represented by the difference between the present market value or sales price and the adjusted basis will have tax consequences. Such gain, unless excluded, will subject the taxpayer to a capital gains tax ' currently 15%. Thus, being familiar with the new rules on the exclusion of gain from sale of a principal residence is essential.

Exclusion of $250,000 of Gain

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