TAX CONSEQUENCE OF QUIT CLAIM DEED

Guest 0.10 Dollars($)

I DIVORCED IN 2005. IT WAS VERY AMICABLE. OUR DIVORCE AGREEMENT STATES THAT OUR HOUSE COULD NOT BE SOLD UNTIL OUR YOUNGEST GRADUATED HIGH SCHOOL. THAT WILL BE IN 2011.

IN 2007, I NEEDED CASH. I SIGNED A QUIT CLAIM DEED IN EXCHANGE FOR $40,000. WITH THE UNDERSTANDING THAT WHEN THE HOUSE IS SOLD, IN 2011, I WILL GET THE REMAINING $60,000 THAT IT IS WORTH.
I DON'T DOUBT THAT THE $60,000 WILL BE PAID.

MY QUESTION IS, WHAT IF ANYTHING MUST I REPORT ON MY 2007 FED AND STATE TAX FILINGS ABOUT THE $40,000. AND IN 2011, ABOUT THE $60,000.

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi,

Welcome to the forum.

You may have to pay capital gain tax. If you sale the property in higher price that in what you have bought the house, then you will have to pay the capital gain tax.

This topic has been previously discussed. So you can check it out at http://www.mortgagefit.com/quitclaim/homesale-taxbasis.html

Hope it helps.

Feel free to ask if you have any farther questions.

Best of luck,
Larry

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