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June 16, 2022
Question

What is the cost basis of my property?

  • June 16, 2022
  • 2 replies
  • 0 views
My ex and I purchased a home for $80,000. We did about $10,000 worth of remodeling (adding closets, a bedroom, new flooring,  etc). He was awarded the house in the divorce. He decided to sell the home about 6 months later, and I purchased it. We agreed on $96,000. However, since he never refinanced and my name was still on the original mortgage, the loan paperwork shows it as a refinance. Since the purchase, I have used it as a rental property. I put a new roof on it last year that cost about $6500. I'm getting ready to sell the property, and I know cost basis dealing with divorce can be tricky. I know if I had been awarded the house and bought his equity, it would be the $80,000 plus improvements. I'm not sure if it is different given he was awarded the house and decided later he wanted to move back to his hometown and sold the house to me. Thank you!

2 replies

June 16, 2022

talk to your divorce attorney and if they can't answer they probably can direct you to a professional that could.

June 16, 2022

@mu_girl09 - isn't this simple?  

 

the mortgage has nothing to do with cost basis.

 

upon the divorce settlement, you did not own the house.  He did.  

 

You then bought the house from him for $96,000.  That is the purchase price and adding in any improvements (the roof) is your cost basis.   It would be the same cost basis that anyone else who bought the house from him and made similar improvements.