Dividing proceeds from selling house between husband and wife equally

We are husband and wife, and file 1040 jointly every year. We are not US citizen nor green card holders, but US residents (resident aliens) for US tax purpose. We are now selling our primary residence that is jointly owned by us. We have lived in this house for more than 10 years. After selling this house, we would like to divide the proceeds into half and half between us since we feel that both of us contributed equally to build this asset. Then deposit each half into respective personal bank account of us. The total amount of proceeds will be about $500,000. I believe this action of dividing the proceeds into half and half between us, although one of us mostly paid mortgages, does not produce any tax problem since we file 1040 jointly. One concern is if the tax authority might see it as gift giving from one spouse to the other, in which case paying some tax may be necessary. Can some one confirm that this is not a problem. Thank you very much.

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Reply to
ysmrysmr
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It depends on a lot of things. Which state do you live in? How long have you been married? Where did the money come from to make the initial down payment on the house? Where did the money come from to make the mortgage payments for the last ten years? The answers to those questions will lead to other questions. But until they are all answered, your question cannot be answered with any certainty. Stu

Reply to
Stuart A. Bronstein

Not to worry: Gifts between spouses are never taxed. Neither income tax nor gift tax applies to them.

Reply to
LoTax

Stuart: I don't understand how the length of marriage, state of residence, and source of funds matters. They are married and jointly own their home. How they split the sales proceeds is not a taxable event. Please explain.

Reply to
A.G. Kalman

Under section 2523(i), the unlimited gift tax marital deduction does not apply when the donnee spouse is not a US citizen. The spouse is entitles to an annual exclusion under 2503, but it's ten times the normal amount (which I assume will be $120,000). Stu

Reply to
Stuart A. Bronstein

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