Legal Question in Real Estate Law in New Jersey

Divorce - buy-out - how to avoid capital gains

I recently divorced and my wife signed quit claim on consideration of payment of her half of market value of house. The new deed and quit claim is held in trust by my attorney till I remove her from mortgage liability and pay her the amount owed her. My attorney showed ''consideration of sale (?)'' to be 1 dollar. Since she made a profit over our cost basis of the house, if this amount is not noted on deed, I will be liable for the capital gain of full house when I sell, including the capital gain which she actually got. How do I prepare the deed so that I may increase my cost basis to reflect my 1/2 or original cost + amount I paid her for her half of property!


Asked on 2/23/07, 6:53 pm

1 Answer from Attorneys
Walter LeVine Walter D. LeVine, Esq.

Re: Divorce - buy-out - how to avoid capital gains

You can show the actual consideration, or can just add the cost to the original adjusted basis (original cost plus cost of improvements, etc.), so you get credit for what you have paid your "x". I also suggest sending her a Form 1099 showing what she received.

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Answered on 2/25/07, 6:47 pm


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