Selling or Keeping the House — Refinancing and Capital Gains in a Florida Divorce
The house is often the largest asset in a divorce, and two of the most consequential questions about it — can the numbers actually work, and what will taxes look like — are worth understanding before the mediation session, not after.
Keeping the House Usually Means Refinancing
If one spouse wants to keep the home, their name typically needs to come off the existing mortgage and go onto a new one in their name alone — which means qualifying for that loan on their own income and credit. An agreement that says “he keeps the house” doesn’t change what the lender requires; if refinancing isn’t realistic, the plan needs a backup.
Until Refinancing Happens, Both Names May Still Be on the Loan
Simply agreeing who keeps the house doesn’t remove the other spouse’s obligation to the lender. Until the loan is actually refinanced or paid off, both parties may still be legally responsible for it.
Selling the House: The Capital Gains Exclusion
Federal law allows an exclusion of capital gains on the sale of a primary residence — up to $250,000 for a single filer, or $500,000 for a married couple filing jointly — provided the home was owned and lived in as a primary residence for at least 2 of the last 5 years. Divorce has a few special rules worth knowing:
- If one spouse transfers their share of the home to the other as part of the divorce, that transfer itself isn’t a taxable event, and the receiving spouse generally inherits the same ownership timeline.
- If one spouse moves out under the divorce agreement while the other continues living there, the spouse who moved out can often still count that time toward their own “use” requirement.
- Couples who don’t quite meet the full two-year requirement because of the divorce may still qualify for a partial exclusion.
Why This Is Worth Raising Early
Whether a sale happens before or after the divorce is final, and how proceeds are split, can affect how the capital gains exclusion applies to each party — worth having on the table during settlement discussions, not discovered afterward.
This article is general information, not legal, tax, or financial advice. Sun State Mediator does not calculate capital gains, determine loan qualification, or advise on refinancing.
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