Question

Separated couple home sale with only one spouse's name on the title in California

Forum|Forum|1 year ago
May 24, 2025
1 reply
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Separated couple:

1. Has a court order specifying how primary residence sale proceeds will be split

2. Both filing as single

3. Only one spouse's name is on the title, so net proceeds from the home sale initially go to that spouse's bank account

Question:

What home sale amount should each spouse specify in their respective tax returns and where? Should any supporting documentation be sent to IRS and how?

M

Mike9241

Property and debt that are acquired between the date of the marriage and the date when you officially separated are considered to be community property in California. so if CP each would report sale of 1/2 the property.

for purposes of the home sale exclusion only one needs to be on title (own it for two years) but each must use it as their primary residence for any 2 years before sale. However, under the tax code allows the spouse who does not actually use the home as a residence to meet the use test during any period that 1) the nonoccupant spouse owns the home and 2) the occupant spouse or former spouse is allowed to use the nome uder a divorce or separation agreement and uses the the home as their main home

I also question filing as single since legal separation is not the same as divorce. If you do not live apart for the last 6 months of the tax year the filing status choices are joint or married filing separately. The same would be true unless living apart for the last six months of the tax year and the taxpayer paid more than 1/2 the cost of keeping up a home for themself and their child who lived with the taxpayer for more than 6 months.

N

NCPERSON1

@Leo N as you are still legally married, there is no option for either of you to file SINGLE under any circumstance.

assuming no children, then you both either file MFS or MFJ.

if children, it's more complicated. The non-custodial parent files MFJ or MFS. The custodial parent files MFJ, MFS or HOH, depending on the circumstances.

L

Leo NAuthor

@Leo N wrote:

NCperson:

1. Legal separation is actually quite common. Here is the info re legal separation for California:

https://selfhelp.courts.ca.gov/divorce-california/legal-separation

If you could reconcile (cancel the separation) under the laws of California, then you aren't allowed to file as single with the IRS, according to several Tax Court cases. You may be allowed to file as single on your California state return. This creates a complex situation where you need to prepare multiple tax returns so that you can file MFS federally but Single in the state. You may want to hire a tax professional -- if they take the position that you can file your federal return as single, then I would expect them to defend you if you are audited. My understanding of the Tax Court cases is that you can't file your federal return as single if the legal definition of separation allows reconciliation, because then it is not a "final" separation.

Opus 17:

Thank you for the clarification! This is way above my head (I didn't even know about the existence of the US Tax Court). TurboTax immediately offered filing both Federal and State as Single after "Legally Separated" was chosen, and the return was quickly accepted by the IRS. Looks like a tax pro will be needed for the 2025 return.