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Gift Tax on Property Settlements: Taxes After Divorce or Separation (2025 IRS Guide)

This guide covers “Gift Tax on Property Settlements” within taxes after divorce or separation. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 504 (2025), Divorced or Separated Individuals, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Context for these rules

Generally, there is no recognized gain or loss on the transfer of property between spouses, or between former spouses, if the transfer is because of a divorce. You may, however, have to report the transaction on a gift tax return. See Gift Tax on Property Settlements, later. If you sell property that you own jointly to split the proceeds as part of your property settlement, see Sale of Jointly Owned Property, later.

Gift Tax on Property Settlements

Generally, a transfer to a spouse who is a citizen of the United States isn’t subject to federal gift tax, because there is an unlimited deduction for transfers to a U.S. citizen spouse. However, a transfer to a former spouse isn’t generally eligible for a marital deduction, and may be subject to federal gift tax unless the transfer qualifies for one or more of the exceptions explained in this discussion. If your transfer of property doesn’t qualify for an exception, or qualifies only in part, you must report it on a gift tax return. See Gift Tax Return, later.

For more information about the federal gift tax, see Estate and Gift Taxes in Pub. 559 and Form 709 and its instructions.

Exceptions

Your transfer of property to your spouse or former spouse isn’t subject to gift tax if it meets any of the following exceptions.

  • It is made in settlement of marital support rights.

  • It qualifies for the marital deduction.

  • It is made under a divorce decree.

  • It is made under a written agreement, and you’re divorced within a specified period.

  • It qualifies for the annual exclusion.

  • It qualifies for the unlimited exclusion for direct payments of tuition or medical care.

Settlement of marital support rights.

A transfer in settlement of marital support rights isn’t subject to gift tax to the extent the value of the property transferred isn’t more than the value of those rights. This exception doesn’t apply to a transfer in settlement of dower, curtesy, or other marital property rights.

Marital deduction.

A transfer of property to your spouse before receiving a final decree of divorce or separate maintenance isn’t subject to gift tax. However, this exception doesn’t apply to:

  • Transfers of certain terminable interests (for example, certain interests in trust), or

  • Transfers to your spouse if your spouse isn’t a U.S. citizen.

Transfer under divorce decree.

A transfer of property under the decree of a divorce court having the power to prescribe a property settlement isn’t subject to gift tax. This exception also applies to a property settlement agreed on before the divorce if it was made part of or approved by the decree.

Transfer under written agreement.

A transfer of property under a written agreement in settlement of marital rights or to provide a reasonable child support allowance isn’t subject to gift tax if you’re divorced within the 3-year period beginning 1 year before and ending 2 years after the date of the agreement. This exception applies whether or not the agreement is part of or approved by the divorce decree.

Annual exclusion.

The first $19,000 of gifts of present interests to each person during 2025 isn’t subject to gift tax. This includes transfers to a former spouse or transfers to a current spouse that don’t qualify for the marital deduction. The annual exclusion is $190,000 for transfers to a spouse who isn’t a U.S. citizen provided the gift would otherwise qualify for the gift tax marital deduction if the donee were a U.S. citizen.

Present interest.

A gift is considered a present interest if the donee has unrestricted rights to the immediate use, possession, and enjoyment of the property or income from the property.

Direct payments of tuition or medical care.

Direct payments of tuition to an educational organization or to any person or organization that provides medical care (including direct payments to a health insurer) aren’t subject to federal gift tax. Therefore, such payments made for the benefit of a spouse or former spouse won’t be subject to federal gift tax.

Gift Tax Return

Report a transfer of property subject to gift tax on Form 709. Generally, Form 709 is due April 15 following the year of the transfer.

Transfer under written agreement.

If a property transfer would be subject to gift tax except that it is made under a written agreement, and you don’t receive a final decree of divorce by the due date for filing the gift tax return, you must report the transfer on Form 709 and attach a copy of your written agreement. The transfer will be treated as not subject to the gift tax until the final decree of divorce is granted, but no longer than 2 years after the effective date of the written agreement.

Within 60 days after you receive a final decree of divorce, send a certified copy of the decree to the IRS office where you filed Form 709.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.

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