Discussion:"Divorce" of domestic partners
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Discussion Forum Index --> Tax Questions --> "Divorce" of domestic partners
| 13 June 2007 | |
| My client has a domestic partner and together they have several assets of substantial value. After 20 years they are going their seperate ways. Their biggest asset is the home. They purchased the home for approximately $150,000. Both partners put money into the deal but the home was purchased in Partner A's name and the mortgage is in Partner A's name and Partner A makes the mortgage payments with household funds. Over the years Partner B has done substantial renovations to the home and paid the costs. Now the home is worth approximately $1,000,000. (They literally built a house around the original house.) If Partner A pays Partner B 50% of the value of the home minus the outstanding mortgage balance, what should the money be classified as? Sale of Partner B's portion of the house, although, Partner B doesn't legally own the home. Just a return of the costs Partner B put into the home? Gift?
I am finding that this is a growing area for tax consultation. | |
| 13 June 2007 | |
| See the posts on Equitable or Beneficial Ownership. It is obviously the sale of a house. If the DOMA didn't exist, then the buyout could be tax free to the ex-spouse. | |
| June 13, 2007 | |
| I agree. I'd treat this as the sale of residence, so the first 250k is taxfree...cap gains after that. They need to decide how to divide the improvements that were made. | |
| 13 June 2007 | |
| cut them in half with a chain saw. That is what usually happens in a divorce.
Did you mean something more productive, JR? | |
| June 13, 2007 | |
| That has actually been done before...! (Gotta do this: apologies ahead, c'mon, keep smiling hat on, not politically correct, WARNING WARNING: Do you think either of these guys could use a chain saw?) Sorry...you were warned.... | |
| 13 June 2007 | |
| JR, I never saw that coming. What chain of events caused it? | |
| 13 June 2007 | |
| Thank you all for your insite. My gut told me it was a sale but I was hoping that I missed something. JR1, I don't think that I specified any gender. And yes they can both use a chain saw better than anyone I have ever seen. | |
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