Will I be taxed on the sale of a home that is titled to me but granted to my wife during our divorce?

by Christopher C. Humes, CPA | Oct 01, 2018

Will I be taxed on the sale of a home that is titled to me but was granted to my wife in the divorce? (I've been given the option to request the buyer’s check be made out to her. Does that alter anything?)

Your question raises a couple of questions that should be considered in connection with your divorce arrangement. You may be wise to consult with your attorney on this as to how the home is currently titled.

You noted that the home was titled to you, but was granted to your wife in the divorce. I’m assuming it was originally titled to you, but was the deed formally transferred to your wife in the divorce? Did your wife “buy you out” as part of the divorce agreement?
Current tax law allows a seller to exclude up to $250,000 of gain on the sale of a primary residence that the seller has resided in as his or her primary residence in two of the five years before the sale. For a jointly owned home, up to $500,000 of gain can be excluded. Depending on when you and your wife were divorced, if you resided there two of the past five years, it may end up being a nonissue, as all of the gain may be excluded.

Again, I suggest running this by your attorney who should have the specifics of your home’s title situation.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Christopher C. Humes, CPA, is with Baker Tilly Virchow Krause LLP in Wormleysburg, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
Financial FAQs

Search the most frequently asked finance and accounting questions and read the responses from PICPA members. Always consult a CPA before taking action.