07/15/2026
Here's a scenario that comes up often in divorce: one spouse stays in the marital home, while the other who's still a joint owner moves out. Maybe the plan is to sell the home together in five years, or ten. So what happens to the capital gains tax exclusion when that day finally comes?
Many people assume that once you move out of a home, you lose the ability to exclude capital gains when it's eventually sold. But as Michelle Muhammed, CFP®, CDFA® of The Next Chapter Divorce explains, that's not necessarily true if the arrangement is handled correctly.
The key is making sure this kind of agreement is clearly outlined in the marital separation agreement, using the right language. This is where your attorney becomes essential but it's equally wise to loop in your tax advisor early on, so the agreement is structured in a way that protects that capital gains exclusion down the road.
It's a great example of why divorce planning often benefits from more than one professional in the room. The legal agreement and the tax strategy need to work together — not as an afterthought, but from the very beginning.
