Tax implications on spousal sale purchase of house ownership

[vikasintl]

What is the name of your state (only U.S. law)? Washington

A legally separated couple jointly owns a house worth 120k. It was there agreement that one spouse can pay 60k and get the full ownership. But if they do so ....in this case what will be tax implications to each spouse...one is receiving money and other is getting full ownership of the house?

 

[AdjunctFL]

What is the name of your state (only U.S. law)? in this case what will be tax implications to each spouse...one is receiving money and other is getting full ownership of the house?

In this case there will be no tax implications to either spouse. The statute is clear that there is no gain or loss on transfers between spouses, including transfer incident to a divorce. Consequently, it is reported on neither return. The spouse acquiring the property also acquires it's prior cost and holding period.

 

[vikasintl]

You said transfer incident to Divorce but in this case it is legal separation ...it means same as divorce?

And you said 'The spouse acquiring the property also acquires it's prior cost and holding period.'

I am totally confused on this...would you please explain what you meant?

 

[LdiJ]

What is the name of your state (only U.S. law)? Washington

A legally separated couple jointly owns a house worth 120k. It was there agreement that one spouse can pay 60k and get the full ownership. But if they do so ....in this case what will be tax implications to each spouse...one is receiving money and other is getting full ownership of the house?

No tax implications at all. Its a division of marital property.

 

[AdjunctFL]

You said transfer incident to Divorce but in this case it is legal separation ...it means same as divorce?

And you said 'The spouse acquiring the property also acquires it's prior cost and holding period.'

I am totally confused on this...would you please explain what you meant?

I said transfers between spouses including those incident to a divorce. This is just between spouses.

If you and your spouse paid $250,000 for the property and purchased it 3 years before this happened, then after it happened the one with full ownership would have a cost of $250,000 and have been considered to own it for three years.