Home Buyout

[Cmws8198]

Hi there, 

my ex-husband and I divorced almost four years ago. He stayed in the house we own and is buying me out of my share. He’s not doing a mortgage refinance but is borrowing the money from his parents. With that said, what are the tax laws surrounding this scenario? 

[Anonymous]

it seems you did not live in the home two out of the five years before sale.  Thus you will not qualify for the home sale exclusion.       the questions you did not answer are - is your name on the mortgage  and what happens when you sell.  if your name remains on it, seek legal guidance before completing the sale.    should something happen, even though you ex will be the only owner, it's possible the mortgage company could come after you.

you should get 1/2 the Fair Value.   against this you would get 1/2 the basis.    your gain, taxed as long term capital gain, will be what you get less your basis.  

[AKtoFL]

I had the same situation during my divorce. I contacted a tax professional to know my rights in this instance and what (if any) had to be claimed on my taxes. If I remember correctly, because it was part of our divorce decree, I did not have to pay taxes on it. However, I would contact a tax professional to see what the current rules are (this was several years ago).

[Anonymous]

i agree that if it was part of divorce settlement it would not be taxable.  Usually things like a home would be sold or bought out immediately.   unless you know for a fact that this was part of the divorce settlement, you'll need to contact your divorce attorney to find out.