If I had to cash out a divorcing spouse for half of the equity in my house, does that affect my basis for tax purposes?

[Bsch4477]

If you buy out your spouse, stay in the house, and later sell the house to a third party, capital gains tax will apply to that sale. You may exclude the first $250,000 of gain—as long as you’ve lived there for two years before selling, or meet one of the IRS exceptions to that rule.

[Critter-3]

Yes it affects your basis ... say you bought the house for 100K  so you each own 1/2 or 50K each.

Now say the house is currently  worth 120K and you pay her 60K for her half ... so your basis is now the original 50K + the 60K = 110K

[Bsch4477]

This is a good discussion of this issue. 

https://seiler.com/wp-content/uploads/2015/02/Basis-of-Residence-in-a-Divorce1.pdf

[ErnieS0]

Your basis in the home would be half the original cost plus improvements plus the amount of the cash out. For example, if you paid $100,000 for your home and added $20,000 in improvements, your “half” at the time of divorce would be $60,000 (50% of $100k + $20k). The house appreciated in value ($200,000) and your buyout was $100,000. Your basis is $160,000 ($60k + $100k).

Property settlements incident to a divorce are not taxable.