House buyout

**debi45** · 03-27-2008, 05:25 PM

I recently received a large sum of money from a house buyout due to divorce. I plan on purchasing another home with this money. Do I have to buy within a certain period of time, before this money is declared income and I have to pay taxes on it. Thank you

**JJohnson1985** · 03-28-2008, 06:23 PM

I am not an accountant, attorney, or even a licensed agent so this is strictly my own opinion and I suggest to talk to one of the persons described.

From what I understand there is no time limit. It is money you gained from the selling of your personal property. The "how" is important, not how long you hang on to it.

Again I am no expert on taxes... yet. This is only my understanding and I would confirm it myself before acting on this conclusion.

**clemy** · 03-29-2008, 08:09 PM

Did you live in that house for 2 of the last 5 years? If so, the first $250,000 of gain is tax-free. Remember to subtract your original basis cost in the house and what is left over is the gain.

**TomAnto** · 03-29-2008, 08:53 PM

Originally Posted by clemy

Did you live in that house for 2 of the last 5 years? If so, the first $250,000 of gain is tax-free. Remember to subtract your original basis cost in the house and what is left over is the gain.

Primary place of residence for a total of 2 years in the past 5, doesn't need to be consecutive. Otherwise, you report cap gain on your yearly taxes just the same as income. You didn't mention whether your spouse had been using it as part of a divorce or separation agreement prior to the buyout.

**debi45** · 03-30-2008, 05:20 AM

You didn't mention whether your spouse had been using it as part of a divorce or separation agreement prior to the buyout.[/quote]

I'm sorry but I don't know what you mean by this. He refinanced the house and gave me my portion, once all the fees, etc. were removed. Our settlement mentioned this is how I was to receive my half.

**TomAnto** · 03-30-2008, 09:17 AM

Originally Posted by debi45

You didn't mention whether your spouse had been using it as part of a divorce or separation agreement prior to the buyout.

I'm sorry but I don't know what you mean by this. He refinanced the house and gave me my portion, once all the fees, etc. were removed. Our settlement mentioned this is how I was to receive my half.

It merely asks if the home had been used by your spouse in connection with a separation agreement while divorce proceedings were ongoing or as part of the divorce agreement. This is common where one spouse agrees to allow the other to live in the marital home while things are sorted out.