How Are Taxes Handled When I Buy the House from My Ex-Husband?
Doesn't my ex-husband have to pay taxes on the money I paid him for his half of the house we used to jointly own? The background here is that I am recently divorced and had to "re-buy" the home on my own. (Fifty percent of the equity was presented to my ex as part of the divorce/property settlement.)Question:
Nope, your ex does not have to pay taxes on the money you gave him. Sales between spouses, or incident to a divorce, are excluded from tax. And that means you get no tax benefit from having made that payment to him. But here's a bright side to remember: If you decide to sell the house, any gain less than $250,000 won't be taxable, since it's your residence.
--Ginita Wall, C.P.A., C.F.P., your Retire Rich Expert