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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Hi, Megan, My ex-husband is finally going to buy me out of

This answer was rated:

Hi, Megan,
My ex-husband is finally going to buy me out of our house after almost three years of the divorce. In the divorce decree, he agreed to buy me out within two years. But he never did. Now that he is going to do it after the arranged time limit, do I have to pay taxes as a consequence? I also heard that no taxes if the settlement is less than $250,000. Is it true?
Thank for your help.

Megan C :

Thank you for your question and thanks for using JustAnswer.com

Megan C :

How are you today?

Customer:

I am good. Thank you

Megan C :

So long as the transaction is pursuant to a divorce decree, there is no tax consequence See publication 504, here: www.irs.gov/pub/irs-pdf/p504.pdf

Megan C :

There is no tax on this transfer, and the basis of your house remains unchanged. You simply get the funds from him and that's all.

Customer:

But I have not been living in the house and the divorce was almost three years ago. In addition, the settlement will be over $250,000, I think

Megan C :

That's okay...this transfer is pursuant to a divorce

Megan C :

There's no tax on transfers between spouses.

Customer:

I usually do my own taxes. Should I ask someone else to do it for me just to be safe?

Megan C :

This is not treated as a sale. It's something totally different.

Megan C :

You can do your own taxes, as this will not even be reported on your return

Megan C :

However, if you are nervous about that, you can certainly have someone take a look.

Customer:

Ok, thanks. I heard so many different answers from friends. I guess I freaked out

Megan C :

That's fine. There's nothing to worry about.

Megan C :

You can read all about this in the publication I linked to you

Customer:

But how will I explain the big amount of cash?

Megan C :

You don't have to explain it to the IRS

Megan C :

Even if you did, just showing them the paperwork on the settlement would be enough

Customer:

All right. Thanks,Megan. Have a good weekend.

Megan C :

You too. If you would please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today

Customer:

I will. by the way, do i have to sign up the monthly fee for this?

Megan C :

No, you do not have to have a monthly fee. I'm not showing that you purchased a subscription, so you will not be charged monthly

Customer:

Thanks

Megan C and other Finance Specialists are ready to help you
Thanks so much for your positive rating and generous bonus. It is greatly appreciated. Please come back and see me any time you have a question. It was a pleasure working with you today.