primary residence sold

[Judy M]

We have a client that has a home that was primary home for himself and wife. They divorced 8 years ago. In the divorce, she was granted 30,000 to "buy her out of the home's equity" The gain on the home at selling many years later is about 260,000(10,000 more than the 250,000 exclusion).

Can the 30,000 that was paid to ex-wife be added to the basis of the home?

[BBmack]

Yes, he purchased her  equity interest in the home for the $30,000 so it would increase his basis.

[sjrcpa · Accepted solution]

NO. There is no gain/loss/tax effect on transfers between spouses or incident to divorce. IRC Section 1041.

[abctax55]

The $ 30000 is just an allocation of marital assets. 

It is NOT a purchase of her *share* and does NOT get added to his basis.