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Divorce Payout

Good morning, community, 

My client is expecting 33k in a divorce settlement that reflects the equity in the house. Just doublechecking if there is any taxable consequence that might be difference because it is a settlement rather than a sale. 

Hope everyone is staying cool, and looking forward to a great weekend, 

Dawn 

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abctax55
Level 15

such as must the dollars must be reinvested into another residence? 

Um.. no.  That part of the tax code (related to re-investing in another home) went away decades ago.

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

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3 Replies 3
abctax55
Level 15

The division of marital assets is (generally) NOT a taxable transaction.  Splitting the equity in a home isn't taxable.

Be sure, if there are any retirement plans, that the split is handled correctly via QDROs - some attorneys aren't savvy regarding these.

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

If a post answers your question, click on *Accept as solution* for future searches

Also, standing six feet away for safety purposes. 😉 

Relieved to hear about the home equity. Are there any conditions, such as must the dollars must be reinvested into another residence? 

Good note about the QDROS, have one of those going on right now, and you are so right about the reality of attorneys who are not savvy about them. 

Thank you, 

Dawn 

abctax55
Level 15

such as must the dollars must be reinvested into another residence? 

Um.. no.  That part of the tax code (related to re-investing in another home) went away decades ago.

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

If a post answers your question, click on *Accept as solution* for future searches

View solution in original post