Divorcing individuals must often choose between homeownership and retirement readiness. The ongoing costs of homeownership may impact your ability to save for retirement each month. In addition, keeping the home in the divorce may mean giving up retirement assets.

Section 121 of the Internal Revenue Code allows some homeowners to reduce the tax owed on the sale of their home. Generally, the rules require that the homeowner has used and owned the home for a certain length of time. Sometimes, divorce results in a situation where the spouse keeping the home is seemingly unable to meet these requirements. Fortunately, there are two special rules for divorced homeowners.

Savvy taxpayers know they can use Section 121 of the Internal Revenue Code to reduce the tax owned when they sell their home. If you are divorcing, don’t keep the house without first estimating what your tax bill will be if you sell the house as a single person.