| |
You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > How does buy-out price affect property-tax value?
Expert: Bruce W. Tyler, EA - 11/8/2009
Question
My ex & I have a divorce agreement that specifies that I have the option to buy-out his share of our marital home for $50,000 or sell it within 7 yrs of divorce with him getting 30% of all profits. I currently live in the house. We were divorced in the fall of 2006. The title and mortgage are in both our names but only I have the obligation to pay the property tax and claim it on my Federal Tax Return. There are no liens.
If I buy-out his share for $50,000: a)will the official selling price (the value of the house for property-tax purposes) change from it's current (approx)$300,000, to $50,000? b)if not, how will the property be valued for tax and mortgage purposes?
Thank you very much for the opportunity to finally find this out!
Answer
Hi Susan,
Excellent questions! First, I am going to assume you live in a state where property taxes are based on the assessed value of the home.
a) The property taxes are based on the assessed value of the home so the $50,000 buyout will not affect your property taxes. Your husband will simply quit claim his interest in the home. There is no income tax reporting required since the transfer is incident to divorce.
b) For property taxes, it's current assessed value. Nothing changes there. For mortgage purposes, everything is based on it's Fair Market Value (i.e. for refinance purposes).
Bruce Tyler, EA
Lancaster, CA
661-724-1041
Add to this Answer Ask a Question
|
|
