I and my ex jointly bought the house in 1998 for $220,000 in California. We lived in the house since then. We started divorce proceedings in 2004 and my wife moved out. Current value of the house is 540,000. I had to pay her, by refinancing my mortgage, half the current property value minus loan remaining which came to about 200,000. i.e [ (540k - 140k)/2 ] . She did not pay any taxes for that. Now I understand if I sell the house I am stuck with a capital gains tax as a single person on the entire gain !!! i.e 540k-220k = 320 K as the limit is only 250K ? This does not look fair, as my cost basis should be readjusted when I paid my ex half the value 200K !!! My real gain is much less.
Any comments ??
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