How to use the divorce property transfer tax calculator
Section 1041 of the Internal Revenue Code says that no gain or loss is recognized when property passes between spouses, or between former spouses when the transfer is incident to divorce. Nothing is owed on the day the deed changes hands. What actually happens is that the recipient steps into the transferor's shoes and takes the same adjusted basis.
That carryover basis is why two assets with identical settlement values can be worth very different amounts after tax. A house bought long ago at a low price carries a large built-in gain, and whoever accepts it also accepts the tax bill that surfaces on a later sale. The calculator shows that deferred gain, the estimated tax at the recipient's rate, and the resulting after-tax value.
Support payments follow a separate rule. For agreements executed after 2018 the Tax Cuts and Jobs Act removed the payer's deduction and stopped taxing the recipient, while older agreements generally keep the previous treatment unless modified to adopt the new rule. Rates reflect a September 2026 reference and are editable.
This tool is for general reference. Section 121 exclusions, state community property rules, retirement account transfers requiring a QDRO and the drafting of the agreement all affect the outcome. Work with a family law attorney and a CPA before signing.
Frequently asked questions
Under Section 1041 no gain or loss is recognized on a transfer between spouses or former spouses incident to divorce. The tax is deferred rather than forgiven, because the recipient takes your basis.
Two assets worth the same today are not worth the same after tax. The one with a low basis carries a larger built-in gain, so whoever receives it absorbs a future tax bill that the headline value hides.
For divorce or separation agreements executed after 2018, alimony is neither deductible by the payer nor included in the recipient's income. Agreements executed earlier keep the old treatment unless they were modified to adopt the new rule.