Capital gains tax and purchase price of house

Forum|Forum|1 year ago
March 25, 2025
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House was purchased at $229K. Ownership was transferred to a trust during marriage and mortgage was paid off. 19 years later, we got divorce. House was valued at $300k in the divorce decree and ownership transferred to me as part of the settlement in lieu of cash.

For purposes of capital gains tax - do I use the original purchase price of home or the value of the home in the divorce decree when ownership was transferred to me when the trust was dissolved.

Not A Product Question

Mike9241

According to Internal Revenue Code section 1041, a transfer between spouses, or former spouses, “incident to divorce” is not taxable in most circumstances. The transfer is treated like a gift, and the transferee takes the transferor’s tax basis in the property.

In addition, to the original cost, the cost of improvements made after the purchase would be included.

scarr416Author

To clarify...I meant that now that I am now selling the house. To determine my capital gain tax on the sale, do I use the original purchase price of house when married (house was owned by a trust) or the value of the house in the divorce decree when I gained ownership.