Buying Hubby Out

Today TaxMama hears from Char in the Tax Parlor who tells us, ” I have a friend who got a divorce last year, 2006. He and his wife owned a house together. Rather than sell the house and split the profit of the sale, the wife chose to keep the house and buy her husband’s portion. My question, is the money she paid her husband taxable to him? ”


Hi Char,

Nope. They are just splitting the marital estate.

And there’s no adjustment to the tax basis of the home for the payment, either.

But this is a good move for both your friends. He gets the money right now, tax-free, and can buy another home or do whatever he likes.

And she gets to stay in the house, not disrupt her life, or that of her children.
And she gets the appreciation.

I wish I had done that and kept my house from my very young divorce.
It would be worth over half a million dollars today. And there wouldn’t be a mortgage. It would have been paid off years ago. And I just figured out that I could have collected more than half a million dollars in rent by now, too.

And remember, you’ll find answers to lots of questions about divorce and other tax information, free. Where? At

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