Expert: Richard Stolp - 10/30/2009

Question
Mr. Stolp,
My ex husband has recently refinanced our home so he could pay me off and put our home in his name only. I was told that I had 2 years to invest the money somehow or I would have to pay a hefty tax amount. I am scared to spend any of this money because I want to be sure I have money on hand to pay those taxes. What are the guide lines for the amount I may be charged? The amount I recieved was under $200,000.00.
Thank you sir.
Lyn

Answer
Hi Lyn,
You have two years to apply the profit from the sale of the house towards buying another house, but the house was only refinanced.  Sometimes the income is handled as gift - incurring taxes after $12,000 - since yours is a "pay off" and may have been court ordered - I would call 800-829-7650 and ask the IRS how to handle it.