If you are about to enter into a divorce, there are some advantages to how a home you own can be transferred to one of the parties of the divorce. No gain or loss is recognizable on the transfer of the residence if this transfer is related to the end of a marriage. Here is one option on how the property ownership can be moved as beneficially as possible. You may be able to:
- Treat the transfer as a gift
- There will be no Gift Tax due
- But the transfer must be within 2 years before or 1 year following divorce
- There should be no change in basis; carryover basis goes to the recipient
Of course it is best to check in with your attorney and your tax accountant before you finalize any transfer of your residence.