The National Directory of Certified Public Accountants

Ask A CPA - Residence - My Home

Divorce Settlement - Cost Basis Of Residence

The transfer of the house to you that was "incident to a divorce" is treated as a tax-free exchange and not taxable. The cost basis to you would be the original cost, plus improvements made over the years, not the possible appreciated fair market value as of the date of the divorce. The current law allows an unmarried individual to exclude up to $250,000 ($500,000 married filing jointly)of gain realized on the sale of a residence.

If you need professional help with "Residence - My Home" or have other tax questions, we can help you find a local licensed CPA for a free, no-obligation consultation.