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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: Divorce and Real Estate Sale Date: 2/11/1999 7:27 PM
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[[Recently a friend of mine sold a house in California for a modest capital gain of
about 20,000. This was not his primary residence so does not qualify for the
exclusion.]]

Maybe yes...maybe no. It depends if it was EVER his primary residence. Or at least in the last two years. I speak more to this issue in my post on the sale of your principal residence and the capital gain exclusion in the Taxes FAQ area.

[[ When he was divorced 6 years ago the title was put in his name alone
and he moved his primary residence to Maryland. He had a verbal agreement
with his ex to send her a portion of the proceeds when he sold it. This he did and
sent money this past November. The question is... Does he pay tax on the whole
gain or only the part he kept?]]

My guess is the whole thing. But I would have to see the paperwork on his divorce. But a simple "handshake" agreement is usually beyond the scope of the law. What he does with the money is his business.

[[ He has had both a yes and no on this. How would
it be documented?]]

In a WRITTEN agreement...referenced in his divorce decree.

[[ He has the canceled check from his ex but nothing else
written.]]

I'm just SURE that SHE will be thrilled to report half of the gain, right?? If she is, he's basically home free. But if there is nothing in the divorce decree that mandates that she recognize a portion of the gain, he's most likely screwed to the wall.

Put it in writing. Always. Every time.

TMF Taxes
Roy

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