How does divorce affect cap gains on primary homes owned -2 years

[Mindy Jensen]

A friend just told me he is getting a divorce, and they have owned their home for less than 2 years. (February 2016 purchase date.)

How does divorce affect Capital Gains on this purchase? After one year, it's long term capital gains, right? Is there a minimum salary threshold for capital gains? $70k is for stock capital gains, I think. 

Are capital gains pro-rated the second year? 

[Natalie Kolodij]

@Mindy Jensen Divorce is an unforeseen circumstance and allows for a prorated application of the gain exclusion

Partial Exclusion May Be Available

If you don't meet the eligibility test, you may still qualify for a partial exclusion of gain if you moved because of work, health, or an unforeseeable event.

You can qualify either by meeting a set of standard requirements (the “safe harbor” provisions) or by showing enough facts and circumstances to validate your claim.

Unforeseeable events. You meet the standard requirements if any of the following happened during the time you owned and lived in the home you sold.

• Your home was destroyed or condemned.
• Your home suffered a casualty loss because of a natural or man-made disaster or an act of terrorism. (It doesn’t matter whether the loss is deductible on your tax return.)
• You, your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence:
  1. Died;
  2. Became divorced or legally separated;
  3. Gave birth to two or more children from the same pregnancy;
  4. Became eligible for unemployment compensation;
  5. Became unable, because of a change in employment status, to pay basic living expenses for the household (including expenses for food, clothing, housing, medication, transportation, taxes, court-ordered payments, and expenses reasonably necessary for making an income).

Ta-da Compliements of the IRS website. Publication 523. 

More info here if your friends need : Primary Home Sale