DEAR BOB: My wife and I separated in April 2003. She moved out and rented a house. We filed for divorce in May 2004. The divorce will be final in January 2005. We own a house together. It is my principal residence where I live with one of our children. The house has appreciated in market value at least $400,000 since we bought it together. The divorce agreement says when the house is sold, within the next five years, the net sales proceeds will be divided 50-50. How far ahead can we sell the house and still both be entitled to claim that $250,000 tax exemption? – Vic S. DEAR VIC: There is no time limit for the Internal Revenue Code 121 principal residence sale tax exemption in a divorce situation. Many divorce agreements specify the family home shall be sold when the youngest child b...
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