Need assistance in the correct division of a 1099-S that contains the sale of personal property (furniture) and a California Family Code 2640 Down Payment Reimbursement classified as Separate Property.
My ex and I have recently sold our marital home (May 2025) and divorce was finalized (November 2024). Our divorce decree declared that Husband bought Wife out on all furniture and fixtures remaining in the home and provided Husband a $365,500 separate property down payment reimbursement. The house sold for $2,880,000.00. The sale price included through a signed addendum that Husband was to be paid $7,500 for the sale of his personal property (furniture).
What is the proper division of the 1099-S?
Sale Price 2,880,000.00
Husband Sale of Personal Property -7,500.00 Signed Addendum 2
Husband Separate Property -365,500.00 Divorce Decree
2,507,000.00 Community Real Property Proceeds
1,253,500.00 1/2 of Communal Real Property Income
Escrow to distribute 1009's as follows:
Wife 1,253,500.00 1/2 of Communal Real Property Income
Husband 1,253,500.00 1/2 of Communal Real Property Income
7,500.00 Sale of furniture
365,500.00 Separate Property Income
1,626,500.00 Total
The agreements regarding the transfer and division of assets between divorcing couples is not relevant to the taxing of property when sold. Each of you reports half of the total sale price of the home and half of the adjusted cost basis. If eligible you each get a $250,000 capital gain exclusion.
The agreements regarding the transfer and division of assets between divorcing couples is not relevant to the taxing of property when sold. Each of you reports half of the total sale price of the home and half of the adjusted cost basis. If eligible you each get a $250,000 capital gain exclusion.
So the party that did not sell personal property or receive separate property income would have to pay tax on income they did not receive?
If I understand correctly you each had equal ownership of the home which was sold at a certain price. In that case you each was entitled to half of the selling price. How the proceeds were exchanged pursuant to your agreement is not relevant to the tax issue. Those considerations are generally taken into account as part of the Agreement but that is a legal issue and the IRS doesn’t concern itself with that.