I have an unusual situation that I can't find addressed in the IRS publications. In 2004, I went through a divorce and in the decree, it stated that the marital home was to be sold. After the divorce was final, the house did go up for sale, but I was able to make an offer to purchase the home back for myself. We went through a regular closing just like with a stranger. So I am now the owner of the house and also the previous co-owner. Because the sale of the house was due to a divorce, is it considered a transfer and the sale does not have to be reported? Or if it does have to be reported, then I have a question about the period of living in the house. I have lived in the house up to the time of sale for 2.5 years from the date of our previous house sale and thus meet the residency requirements to exclude any gain if I choose to. My ex only lived in the house for a few months from the date of the previous house selling and then lived another two years in his own apartment before the divorce and the house being sold to me. Thus it looks to me that he can't exclude any gain since he doesn't meet the residency requirements, or does the fact that we were still married, give him an out on that and he can still exclude his portion of the gain. Any answers would be much appreciated. Also any comments on my interpretations and if they are correct are appreciated. Thanks. LL
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