My wife and I are getting a divorce. We own two houses, one will
go to her and the other to me. 

My question is if I were to sell my house after our divorce, and suppose
that I live in the house for 24 months out of the previous 50, what is the
limit of the profits for income exemption, assuming that I am dividing
the profits 50-50 with my then ex.? I understand that if we are still
married then the first 500k is exempt, and if I am single the limit
is 250k, but what if we get divorced AND I am giving her 50% of the
profits?

If there a legal structure that we can set up to keep the limit 500k?

Thanks tons!

According to the following sources, you can structure your situation
so that you will both get to deduct $250,000 from the sale, even if
you sell the house after your divorce.  This structure is called joint
ownership.

Sincerely,

Wonko

"You and your husband may each to exclude up to $250,000 of gain when
you sell your home, if you have both lived in it for two of the five
years before sale. If your husband has been gone from the house for
more than three years when it is sold, there is a way you can both
still qualify for the $250,000 exclusion. Your old home will be
considered to be your husband's residence if you have been occupying
it prior to sale under the terms of a divorce or separation agreement
or court order. This new rule opens the door to joint ownership of
homes for extended period after divorce."

"Should You Keep Your House After Divorce?" By Ginita Wall, CPA, CFP,
WIFE.org (2003) http://wife.org/suddenly_single/ss.keephouse.htm

"Consider keeping joint ownership of the house. There might be a tax
benefit to retaining joint ownership of the home. If you retain joint
ownership of the home, you might be able to shelter a combined
$500,000 of gain from taxes, when you eventually sell it. If only one
of you owns the home on the sale date, then the most gain that can be
sheltered from tax is $250,000."

"Finance... Who Gets the Home (and Other Issues)" Family Law Software,
Inc. (2006) http://www.familylawsoftware.com/finance/home.htm

"If you and your spouse sell the house upon divorce, you each can
exclude up to $250,000 of any capital gain. In a joint ownership
situation, both parties can also benefit from the exclusion when the
house is finally sold."

"Should you keep the house in a divorce?" Microsoft (2006)
http://moneycentral.msn.com/content/CollegeandFamily/Suddenlysingle/P80537.asp

Search terms:  house sale divorce "joint ownership"; house sale divorce

You pay Taxes on Profits above $250K.
So if you sell the house, give your wife 1/2 of the profits, then you
pay taxes on profits above $250K. Its really no different that if you
were married.

I think that i can offer some answer on this issue. Since I am not
listed as researcher you can reply me at mitconpl at eth dot net to
see if the advise is of use to you.

Mukul Mittal