Q: I was divorced a little more than 20 years ago, and a quit claim deed transferred the property to my name. My name was never on the original deed or mortgage. When I sell my home will I have to pay taxes on profits over $250,000 over the value of the home when it was built in 1972, or can I use the valuation when the quit claim deed was signed in 1984? Many thanks.

A: When you were given the property, you were given the property at its original cost basis. So, if the property was purchased for $25,000 and someone gave that property to you, the cost basis is still $25,000 even if the property was worth $100,000 when it was given to you.

If you’re single and use the property as your primary residence, you’re allowed to exclude from federal income taxes up to $250,000 of profit from the sale of the home. And, if you’re married, you are allowed to exclude from federal income taxes $500,000 of profit on the sale of the home.

The key question for you will be what is your cost basis and how much profit will you receive from the sale of the home. To determine the cost basis, you take into account what the home was purchased for and add to that number the costs associated with the purchase of the home.

Then you add all capital improvements made to the home over the years. If you put on an addition to the home, install a new kitchen and put on a new roof, all of these items will increase your basis in the home. And then when you sell the home, the costs of sale will get factored into determining your basis and the profit you get out of the home.

Given all of these issues, you should talk to a real estate attorney, tax expert or accountant who can help you figure out the cost basis for the home, and assist in helping you figure out whether you’ll have any taxes to pay or estimate the amount of taxes you will have to pay the federal government.

Good luck.