Divorce, Taxes and Selling Your Home

Red brick house with two car garageDuring a divorce, your family home may be sold in the asset division process, but it’s hard to make sure all your options are considered.

When you choose to get a divorce through the collaborative process, a financial neutral is a vital part of the team, especially when selling your home is part of the equation.

A financial neutral can help you identify all of your financial options and assist your attorneys in drafting a divorce agreement that is mutually agreeable and financially sound.

Here are some tax ramifications that you should keep in mind when selling your home:

  • Check out the current capital gains rules – as an example, for 2020 the IRS excludes the first $250,000 of gains for a single person or $500,000 if you and your spouse file your tax returns with a married filing joint tax status.
  • Preparing ahead of time for post-divorce taxes can help avoid surprises at tax time.
  • Before selling your home, you must prove ownership – are both names on the title?
  • The home sales proceeds do not have to be equally distributed between you and your spouse.  One spouse may choose to take a different assets, i.e., one spouse may be allocated the ownership interest in a business while one spouse may be allocated net proceeds from the sale of your home.
  • When possible, consider getting a real estate agent that specializes in divorce home sales.
  • If you sell your home after the divorce has been finalized, you may have to pay a hefty sum in taxes.

Determining how to divide your shared properties can be difficult. Still, when you work with a financial divorce specialist during a collaborative divorce, they can help both of you discover the best path forward regarding your home.

When you utilize the experts in the Los Angeles Collaborative Family Law Association, you can let down your anxiety and stress because you will know that when your divorce is finalized, each spouse involved will be ready to face the future with confidence and a financial plan that meets each of your needs.

Call us today if you would like to learn more about how our members at the Los Angeles Collaborative Family Law Association can help you and your family wade through the financial twist and turns of a divorce!

Note: This information is general in nature and should not be construed as legal/financial/tax/or medical advice. You should work with your attorney, financial, medical or tax professional to determine what will work best for your situation.

 


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