Selling rental property-I have fully depreciated the property. What would be tax implications of selling the property to my ex-wife for $1.00?

[jmklein2]

I purchased the home for about $65,000 about 35 years ago and current value is about $200,000.  I did live in the house for the 1st few years and then again a few years in between.  I ex is living in the house paying me rent but now just willing to give it to her.  Please advise.

[view2 · Accepted solution]

Seek the help of  a local tax attorney.

I.R.C. § 1041 provides that no gain or loss is recognized on a transfer of property from a spouse or a former spouse to a spouse or former spouse if the transfer is incident to a divorce.The parties cannot elect out of it. The section is applicable even if the spouse or former spouse pays consideration for the property by giving up rights, transferring other property, or paying cash.

 I.R.C. § 1041 provides that a transfer is incident to a divorce if (1) it occurs no more than one year after the date on which the marriage ceases, or (2) the transfer is related to cessation of the marriage.

Then you have (6) Special rule for gifts

In the case of a disposition of any interest in a passive activity by gift—