I got a divorce in TN. My ex-husband refinanced the house in his name and will be giving me $35,000 to pay off my student loans. How will this affect my taxes?

[jolened-combs]

We have no children.

[Critter-3]

Divorce settlements are not considered income and as such are not reported on an income tax return.  

[Carl]

Divorce settlements are not considered income and as such are not reported on an income tax return.

While the above statement is absolutely true, I see nothing in the post to indicate the $35,000 was a part of any settlement. I only point this out because the statement is "my ex-husband" as opposed to "my soon-to-be- ex husband" or something of that nature. For all I know, he's been your ex for a number of years and is just now getting around to refinancing. So while the statement is true, it's perfectly possible it does not apply to you. Just be aware.

[Critter-3]

Carl is correct ... however unless this was a payment for some kind of service it is not taxable to you ... either as a gift or divorce settlement. 

[Mike9241]

was the $35K part of the property settlement in the divorce.  if he's doing it voluntarily its a gift to you - not taxable to you and he would need to file a gift tax return since the amount is over $15K - but that's his problem

[jolened-combs]

@Mike9241 @Carl The divorce was finalized on October 4th. In the agreement we were going to sale our home, the equity would be used to pay off my student loans and the remainder was to be split. However, because of the housing market, he was unable to find another suitable home so he just "bought me out" which was not in the agreement. We should be finalizing everything within the next couple days. 

[Carl]

I would suggest you seek the advice of a tax attorney on this. I would not expect your divorce attorney to know the tax implications, since the terms of the divorce settlement appear to have not been followed.

[Mike9241]

you may not need a tax attorney if you talk to your divorce attorney to get the agreement revised so your soon-to-be-ex pays you 1/2 the net value of the house as a property settlement. this would make it non-taxable. 

[Hal_Al]

For tax purposes, "bought me out" might be treated as the sale of your share of the home.  The money (technically the capital gain on the sale, if any)  from the sale of your primary home is not taxable (up to $250,000). 

The standard requirement is that you must have owned and lived in the home 2 years, out of the last 5 years. But, divorce is an exception to the 2 year rule. 

Whether this is a divorce settlement, home sale, or gift, there will be no income tax due; nor do you need to report it, on your tax return, unless you get some tax document (e.g. 1099-S)