I did not get the house...he did. I am getting a settlement out of his TSP account. I want to use this money to put down on a house. Will I be taxed on this money if I do that, and how does it work? I have read some places that IRA or other type account settlements can have a tax amount of up to 35%. Lets say for argument's sake my settlement is $50,000. Does that mean I will have to pay a lump sum tax of $17,500 when I get that money? Is that still the case if I am going to use that $50,000 as a down payment?I am getting a settlement out of his TSP, I am getting "1/2" of it. I want to get a cash payout. I want to take that money and use it to buy a house. I am sure there will be a penaltly for getting the money paid out to me versus rolling it into an IRA. I know that. What I am TRYING to find out is if I do get the cash payout, will it be taxed? Is it taxed as income, just tacked onto my yearly income at the end of the year? Is it taxed separately? If it is, how much am I looking at in tax percentage, 10%? 35%? If I use that money to buy real estate, does that have any bearing on how it is taxed?