11 Nov What happens on tax for this home after my divorce?

Q. On the question of capital gains on the sale of my home of 44 years, the initial cost was $50,000, then 10 years later, in a divorce settlement, I bought out my ex-spouse’s share for $70,000. Which numbers and dates do I work with for capital gains?
— Seller

A. Good luck with the sale of your home.

We understand why you’re unsure.

The date you purchased your home is the date you use when you sell it, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

He said you purchased your home in two stages. In the first stage, your cost was $25,000, or half of the purchase price. The second stage was when you bought out your ex. That adds $70,000 to your original $25,000, Kiely said.

This brings you to $95,000.

Next, we have to look at home improvements.

“If you and your spouse made any home improvements before your split, you would add half of those improvements to the $95,000,” he said. “If you made any improvements after you bought out your ex you would add 100% of those improvements to your cost.”

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This story was originally published in November 2024.

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