Divorce settlement - Cost basis of Residence
Answer:
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.
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.
