The property division process of some divorces is fairly simple. In others, it is a lot more complex. If you and your spouse have acquired considerable assets, such as real estate holdings, you might find that the property division process is complicated because of all the factors that must be considered.
What should I know about our marital home?
Your marital home is one of the assets that needs to be addressed in your property division settlement. You have three options for dealing with the home. The first is that one spouse gets the house and buys the other spouse’s interest in the home. Another is that the house is sold and the proceeds are divided right away. The final option is that the house is sold and the proceeds are divided eventually.
How does the marital home affect taxes?
If you opt to sell the home, you might have to pay the capital gains tax. If the home was your principal residence, which means that you lived there for at least three years out of the previous five, you can avoid the tax if you reinvest the proceeds within two years of the home’s sale. You lose this protection if you haven’t lived in the home for the required number of years, so that is a consideration in lengthy divorces.
You can’t let your emotions dictate your choices when it comes to property division. Looking at the tax implications and long-term costs of the assets you are seeking can help you decide if each asset is going to help or hinder your financial future.
Source: FindLaw, “Divorce, Taxes, and Your Estate Plan,” accessed June 10, 2016