Unlike spousal maintenance, which is taxable to the person who receives it and deductible to the one who pays it, a property equalization payment does not result in a taxable obligation.

Are property equalization payments taxable?

A “property equalization payment” is intended to equalize the final division of property between parties to a divorce. It can be paid in a lump sum or by installment payments. Unlike spousal maintenance, a property equalization payment does not result in a taxable obligation.

Are equalization payments considered income?

Taxation of Equalization Payments

Generally, equalization payments between divorcing spouses do not create a “taxable event” and therefore are non-taxable. ... Thus, the wife may have to pay the husband's share of capital gains taxes for the marital home.