Q. Will I have to pay capital gains? for the whole house or just for the small percentage I am receiving?
A. Simple answer: for the small percentage you are receiving
You may want to seek tax professional or legal assistance for this situation.
Your capital gain is not based on the "proceeds" from the sale. That is, the mortgage payoff, if any is irrelevant. Your capital gain is your percentage of the difference between the sale price (less expenses of sale) and your cost basis.
It may make a difference in how the money is paid to you. Will the closing agent be paying you or will your ex spouse be paying you after he receives all the proceeds? That is, are you selling a capital asset or just receiving a divorce property settlement? Will the 1099-S be in just his name or both of you?
