Tax rules include some special provisions pertaining to the transfer or disposition of the taxpayers' home incident to divorce and the application of ownership and use rules for purposes of qualifying the exclusion of gain.

• Transfers between spouses or transfers related to divorce - For an individual holding property transferred between spouses or transfers incident to divorce, the period the individual owns the property includes the period the transferer owned the property. However, the period that the transferer spouse or former spouse used the property is not included in the period that the individual used the property. Therefore, the transferee spouse would still have to satisfy the use requirement in order to qualify for the exclusion.
  
  
• Sale after ex-spouse retains property for some period of time - Only for purposes of the home sale exclusion, an individual is treated as using property as the individual's principal residence during any period of ownership, while the individual's spouse or former spouse is granted use of the property under a divorce or separation instrument. This means that if a husband (or wife) continues to own the home after a divorce, and his/her former wife (husband) is granted use of the property under a divorce instrument, the exclusion could be available when the husband (wife) sells the house, if he (she) meets the ownership requirement and his wife (her husband) meets the use requirements.