Posted on: 21st Dec, 2006 07:33 pm
As a part of the divorce agreement, I have been offered the sale proceeds when my ex-wife bought me out of the house which we had earlier purchased. I lived in the home for about 7 years. As the calendar year is nearing its end, will the proceeds be taxable like other income sources?
I don't think its taxable. You may consult a tax advisor.
Hi Valerie,
Your income will not be taxable as no gain or loss is recognized on the transfer of property between spouses or former spouses on account of divorce.
The loss or gain is taken into account when you sell property to satisfy a property settlement. But you are not considered to be selling half of your interest in home to your spouse. Instead, your situation falls under the general rule that no gain or loss is recognized in case of property settlements following a divorce.
Hope this helps you.
God bless you.
Samantha
Your income will not be taxable as no gain or loss is recognized on the transfer of property between spouses or former spouses on account of divorce.
The loss or gain is taken into account when you sell property to satisfy a property settlement. But you are not considered to be selling half of your interest in home to your spouse. Instead, your situation falls under the general rule that no gain or loss is recognized in case of property settlements following a divorce.
Hope this helps you.
God bless you.
Samantha
If there is an unmarried couple, one of whom buys out the other from the property after separation, the partner getting the sale proceeds of home is considered to be selling his share of property.
If the property is the principal residence, then the unmarried partner may have to pay capital gains tax if there is gain. He may also qualify for an exemption of $250,000 (for 2006).
Sara
If the property is the principal residence, then the unmarried partner may have to pay capital gains tax if there is gain. He may also qualify for an exemption of $250,000 (for 2006).
Sara