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Stephanie B.
Stephanie B., Enrolled Agent
Category: Tax
Satisfied Customers: 555
Experience:  MTax, EA, QuickBooks Proadvisor. Over 10 years accounting and tax experience specializing in individual and small business.
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My question concerns sale of personal residence. Facts 1-

Resolved Question:

My question concerns sale of personal residence.
Facts:
1- Purchased home jointly on 8-15-1971 for $46,000
2- Divorced - home transferred to me incident of divorce - divorce final 9-14-1983 - FMV at that time was $250,000.
3- Sold home 8-18-2010.
What is my basis that I begin with before adding cost of improvements, recording fees etc.
Thank you for your assistance. XXX@XXXXXX.XXX
Submitted: 3 years ago.
Category: Tax
Expert:  Stephanie B. replied 3 years ago.

Stephanie B. :

This is a great question! I had to research this a bit due to the dates. My first thought was divorce has no increase in basis. However, transfers that occured before July 19, 1984 in exchange for your release of maritial rights, your basis is generally the FMV of the property at the time you received it. http://www.irs.gov/publications/p523/ar02.html Here is a link to the IRS website where I found this information. This is publication 523. Also, there is a publication 504 that may be of assistance as well. It is for Property Settlements.

Customer:

Thank you - I have read that but wanted to be sure I understood. Do you have publication 523 available to you? If so, page 31.

Stephanie B. :

Yes I do.

Stephanie B. :

I assume you do as well.

Customer:

Yes I do. Do I use the full FMV at the time of transfer?

Stephanie B. :

That is what the worksheet says. It says to enter the FMV of the home at the time you received it. Then it looks like you get to add your improvements and such that occured after that date of transfer to the FMV.

Customer:

When reporting the sale to IRS, is the date acquired original purchase or transfer date?

Stephanie B. :

Honestly, it wouldn't make a difference which you used because they will both be long term. I am looking to see what I can find though. I find it for after when the basis doesn't change but haven't found it yet for when the basis did change.

Stephanie B. :

I can't find anything on the holding period, which date to use. I would almost use the new date of 9/14/83 since this is when you received the other half of the property and received the new basis.

Customer:

Thank you so much for your help!

Stephanie B. :

You are welcome! Thanks for the great question!

Stephanie B., Enrolled Agent
Category: Tax
Satisfied Customers: 555
Experience: MTax, EA, QuickBooks Proadvisor. Over 10 years accounting and tax experience specializing in individual and small business.
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