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Barbara L. Jouette, Attorney, P.C.
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Impact of capital gains on property division in divorce

For some Texas residents contemplating divorce, there are questions about basic choices that are made during that process. Decisions over alimony and property, as well as retirement accounts, may best be made when a workable understanding exists.

Deciding what to do with a marital home, particularly when a couple has been married for a long time, may seem confusing at first. Sometimes one spouse would prefer to remain in their home and, if the home is considered marital property, this is basically a transfer of assets. It is also non-taxable. When a couple makes a decision to sell their home, they may be eligible for exclusion of capital gains up to $500,000 jointly or $250,000 singly. If the couple still pays a mortgage on the home and one spouse remains in it, a portion of the mortgage paid by the other spouse may be considered alimony and treated differently. Retirement accounts are subject to division also, and the court will issue specifics about how the accounts may be divided. When this asset is transferred from one party to the other, the recipient may roll the funds over into an IRA or other retirement account.

Property division may be approached in various ways. Focusing on the value of the property after taxes may be one option. Deciding the role capital gains plays in terms of retaining or transferring a property is advisable and an attorney may offer insight into this. Tax consultants may also provide additional information.

Property division relies on a precise and accurate accounting of all marital and separate property. Couples may work with their attorneys to separate marital from nonmarital property and decide the best way to divide marital assets and liabilities to leave the marriage with a measure of financial security.

Source: NerdWallet, "Divorce: Making Sense of the Confusion", June 03, 2014

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