Settlement on house in divorce,receiving $170,000.00 What are the tax ramifications,If I split this 1/2 this year 1/2 next year will the tax be lower.
2006-11-08 20:41:23 · 5 answers · asked by Cherokee 1 in Business & Finance ➔ Taxes ➔ United States
you may want to ask phil how one can have more than 250,000 gain on a house where you only get 170,000 in proceeds. it is pretty obvious he doesnt live in a glass house. while i disagree with taxman that definitely nothing is taxable, phil's assumption is worse and his attitude is not appropriate for yahoo!answers.
chances are that nothing is taxable. the only thing that would be taxable is if you had to sell something at a gain and then divide the proceeds. if all you sold is the house and it was 50/50 and the house was sold for less than 500,000 more than your basis, what you paid for it, you will not have any taxable income
2006-11-09 04:20:10 · answer #1 · answered by CA_hiker 2 · 2⤊ 0⤋
I may be wrong, but I thought that this money was already "owned" by the two of you. The divorce settlement just says who gets the money. Existing property (money, real estate, stocks) that switch hands from one spouse to the other in a settlement or in any other fashion is NOT a taxable event. New money earned by one spouse and given to the other in the form of alimony is different. Alimony is taxable to the recipient and is a negative adjustment (deduction if you will) to the payer. But exchange of existing post-tax property is not a taxable event.
2006-11-09 06:59:24 · answer #2 · answered by TaxMan 5 · 0⤊ 1⤋
Sale of main home owned for two years lets you take a $ 500,000.00 gain and owe no tax whatsoever. Divorce procedings sales are generally tax exempt anyway. Check with your tax advisor or give me the particulars for an exact answer. My first impression is that you will have no tax liability in any case.
2006-11-09 10:59:35 · answer #3 · answered by acmeraven 7 · 1⤊ 0⤋
It is pretty obvious that Taxman knows nothing about taxes, why does he persist in answering questions?
The taxable event is the sale of the house, you received $170K so at least your interest in the house was sold.
You can't split the gain across two years.
How much you receive isn't the important number, the important number is how much the GAIN on the sale is, your profit.
IRS Publication 523 will tell you everything you need to know including how much of the gain is excludable from your income.
2006-11-09 07:46:33 · answer #4 · answered by Phil O' Brien 3 · 0⤊ 2⤋
Now that others have guessed what the source of the money is why don't you tell us and we can give you a more precise answer.
2006-11-09 10:13:19 · answer #5 · answered by ? 6 · 0⤊ 0⤋