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ateksmom
New Member

I'm selling my house to my spouse. He is using some of the equity as his downpayment. It's a gift from me to him. Is there a penalty/tax for either of us at some point?

The sale is part of a separation agreement.  House and mortgage are in my name.
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3 Replies

I'm selling my house to my spouse. He is using some of the equity as his downpayment. It's a gift from me to him. Is there a penalty/tax for either of us at some point?

There are no tax consequences for gifts between spouses, but you should consult with local legal counsel.

 

See https://www.avvo.com/divorce-separation-lawyer.html

TomD8
Level 15

I'm selling my house to my spouse. He is using some of the equity as his downpayment. It's a gift from me to him. Is there a penalty/tax for either of us at some point?

"I'm selling my house to my spouse"

 

You should consult a local tax professional.  If you sell the home below its fair market value ("FMV"), you're giving the buyer a "gift of equity", which may require you to file a gift tax return.  Also, if you realize a capital gain from the transaction, you may be liable for a capital gains tax.

https://www.investopedia.com/terms/g/gift_of_equity.asp#:~:text=A%20gift%20of%20equity%20is,the%20ac....

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

I'm selling my house to my spouse. He is using some of the equity as his downpayment. It's a gift from me to him. Is there a penalty/tax for either of us at some point?


@TomD8 wrote:

If you sell the home below its fair market value ("FMV"), you're giving the buyer a "gift of equity", which may require you to file a gift tax return. 


A gift tax return (Form 709) for a gift to a spouse is required only in very limited circumstances, which most likely would not be applicable here.

 

See https://www.irs.gov/instructions/i709#en_US_2022_publink16784xd0e489

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