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saruhlou
New Member

How do I handle a property transfer/divorce in a tax situation?

My ex-husband and I separated in January 2015. I lived in the home until May and paid all expenses until I moved out. Our divorce finalized in June and property transfer finalized in August  I paid all expenses on the property until I moved in May.  Now I own a new home. How do I also handle the carryover from last year? How do I handle this tax situation?
4 Replies
Critter
Level 15

How do I handle a property transfer/divorce in a tax situation?

Property transfers incident to a divorce are not reported on an income tax return.

If you paid mortgage interest & property taxes on the home you owed you can deduct them as usual on the Sch A.
Opus 17
Level 15

How do I handle a property transfer/divorce in a tax situation?

The old rules about buying a new home to replace an old home were eliminated many years ago.  Each home is now a separate transaction.  If you bought a home in 2016, then you may have certain tax deductions on your 2016 tax return, such as mortgage interest and property taxes paid or credited at closing.

There is no tax issue for assets transferred in a divorce, such as if you became full owner (received half the house) in August 2015.  That's not taxable to you or deductible to your ex.  If you then sold that house in 2016, you can exclude up to $250,000 of taxable gain as long as you owned the home at least 2 years, and lived in it as your main home for at least 2 of the past 5 years.  However, if the home was ever used as a rental or for business (day care, home office deduction, etc.) you may owe tax on recapture of depreciation.  If you don't owe recapture and your gain is less than $250,000, you don't even need to report the sale unless you recieved a form 1099-S at closing.  See this for more https://www.irs.gov/uac/about-publication-523

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
jet90
New Member

How do I handle a property transfer/divorce in a tax situation?

divorce july 2019, all joint property quit-claim deed trf to wife, mortgage pmts after divorce date now paid by ex-wife.

RobertG
Expert Alumni

How do I handle a property transfer/divorce in a tax situation?

You don't have to report it on your tax return.

 

Under Section 1041(a) of the Internal Revenue Code, spouses can transfer property to each other (or ex-spouses if the transfer is pursuant to a divorce) without recognizing gain (or loss) on the transaction. 

 

As to the mortgage payments, they are deductible by any person who is liable for the loan, and makes the payments.

 

@jet90

 

 [Edited 01/24/2020|8:09 PST]

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