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Tax Implications of a Quit Claim Deed in Divorce

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  • 06-11-2015, 05:01 PM
    Jana Baran
    Tax Implications of a Quit Claim Deed in Divorce
    My question involves real estate located in the State of: California

    We are getting a divorce with my husband and I would like to buy him out of the house (transfer the house title from both names into my name exclusively).

    We found that the way to do it is through quitclaim deed.

    What are the tax implications of the quit claim deed? Namely, does he owe income tax on the received sum? Does quit claiming affect the property tax value? Is there any transfer tax?

    Thank you!
  • 06-11-2015, 05:57 PM
    Ohiogal
    Re: Tax Implications of a Quit Claim Deed in Divorce
    Are you going to refinance the mortgage? There are not tax implications of a quit claim deed but again, are you going to refinance the mortgage that is left?
  • 06-11-2015, 06:47 PM
    Jana Baran
    Re: Tax Implications of a Quit Claim Deed in Divorce
    no refinancing.

    So the money the grantor receives from the deed does not count as income (not taxable)?
  • 06-11-2015, 11:25 PM
    Taxing Matters
    Re: Tax Implications of a Quit Claim Deed in Divorce
    If the arrangement is part of the formal divorce settlement or judgment then the transaction will not have any federal or California state income tax impact. If it is sale outside of the divorce and not part of the divorce settlement, then the selling spouse might owe income tax on the proceeds. The details of your husband’s ownership and residence in the home and how much, if any, gain would be realized in a sale matter for that. See IRS Publication 504 for a discussion of property transfers between spouses in a divorce and IRS publication 523 which discusses the tax treatment of selling your home.
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