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New Member
posted Feb 9, 2023 7:10:42 AM

Does refinancing a property on my own reset the capital gain?

I purchased a property with my x wife. After we separated, I had to refinance the amount owed on the property excluding her from the deed.  The amount was much less than the purchase price we originally bought it for. In this case will the capital gain reset for the amount I refinanced it for?

0 2 605
2 Replies
Expert Alumni
Feb 9, 2023 7:20:14 AM

No, the capital gain exclusion is based on ownership not refinancing.  So as long as you owned and lived in the home for 2 out of the last five years, you would still qualify for the exclusion even with taking her name off the deed and refinancing the loan. 

Level 15
Feb 9, 2023 10:24:24 AM

Refinancing changes nothing on the SCH E. Not even in the assets/depreciation section.

Now as you work it through, you will be asked if you refinanced the property. Indicate that you did, and follow the prompts. You will be able to amortize any refinance fees, and the program will work you through that.