Last week we talked about taxes as it related to child support and spousal support. This week, we will focus on taxes and property division. Property division is among the most important aspects of any divorce. It is not uncommon for many divorcing Ohio couples to enter into a property division agreement without thinking of the long-term ramifications that the division may have on their tax status. However, by failing to take tax implications into account, they may be exposing themselves to future financial issues.
An individual’s tax status is based on whether he or she is married or divorced on December 31. Therefore, if a couple is married on New Year’s Eve, they will be considered married for the entire previous year. Meanwhile, if a couple divorces at the end of the year, they will be considered divorced for that whole year.
Divorcing couples should also consider seeking advice with regards to the tax issues that surround their marital home. Capital gains taxes may play a role on the sale value of a home, depending on whether certain threshold issues are met. In order to reduce the issues surrounding capital gains taxes, there are a number of factors that may come into play. In order to be fully informed of these issues, it may be prudent to seek outside assistance prior to the finalization of the divorce.
There is no way that an Ohio couple can avoid all of the tax implications that they will face due to their property division settlement. However, if they are able to seek the right advice and chart the proper course, their exposure may be significantly limited. This process will enable both parties to move forward with enough money to jumpstart their new life while also ensuring that any tax obligations have been properly met.
Source: Bluffton Today, “TAXING ISSUES: Division of assets, divorce have tax implications,” Edward J. Loughrey, Aug. 1, 2012