My ex-wife and I bought and lived in a duplex. We eventually divorced and agreed to co-own the duplex where she remained. Later, she moved out and I moved in. (we were always on good terms). A few years later, we agreed that I'd "cash her out" by refinancing in my name only, pulling out some equity and cashing her out. The duplex was never really part of the divorce, only stating that we'd continue to co-own it. If we paid 75k originally and I refinanced for 100k, paying her 25k, can my cost basis now be considered 100K?
You owned a duplex with a partner.
Cost $75K, $37.5K you, $37.5K partner (as a joint purchase, you co-owned it)
She sold her share to you, at a loss, for $25K.
Your new basis is $62.5
The $100K you borrowed is not part of the math. Didn't the mortgage get paid down a bit during the time you owned it? This feels like a cash-out, and not really relevant to the second purchase of her share.
Edit to address possible oversimplification -
The original purchase price is half yours. You then bought your partner’s remaining half for another price, when you sum these up that’s your total basis.