Think about the future here. Let go of the animosity (especially if you have kids!), because sometimes while the pain and tumult of divorce can be overwhelming, sometimes the money issues, especially with the house, can hurt even more! Something you honestly don’t want….
You Might Be Divorcing Your Spouse, But Try Not to Divorce Your Entire Life
It’s the Simplest Way to Get Taxes Figured Out About the House
Divorce doesn’t have to destroy the kids. There are options out there, and they’re not to blame. So it just so happens that many divorcing couples find the option to keep the home when dealing with a divorce until those kids move out when they’re older. There’s a specific reason to doing this, in that it’s not going to be a forever thing when owning the home indefinitely — eventually, that home will get sold!
The Tax Benefits Are Obvious, But Keep This Important Point in Mind….
If you’re going to sell that home later on, make sure you get that attorney on your side to stipulate in the divorce agreement that the home still is your “main residence” for tax purposes. The law states that you won’t get the tax benefits of selling the home if you’re not living in the home for at least two of the last five years of that primary residence.
So if the son and daughter are only in their teen years, and you’ve moved out, selling the home leaves you high and dry while the ex-spouse reaps the tax benefits. Therefore make a point to research with the Income Tax Planning Network and find out what you need to do to settle the issue correctly.
Because Selling a Home Can Be a Benefit
Tax benefit, to be exact. It just takes timing. And divorce is anything but timely. Make it a point to sign up with ITPN and talk to an expert immediately. Get the lawyer, too, while you’re at it. Divorce doesn’t have to destroy the finances, especially when you’re facing the issue of selling that home. Either you sell the home and make anywhere around $250K in profit, or you’re not paying attention to those tax laws and have to fork over a ton of that profit to the IRS. You pick.
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We raise the question, because home selling has a specific benefit many enjoy: the tax benefits. That’s what we mean when we say we can maximize taxes by taking advantage of the exemptions. Deductions, deductions, deductions. You get all the profit when you sell.
But Only When the Property Is Your Actual Home
Case in point: a vacation home won’t apply to those same exemptions. So what can you do? If you want to sell that vacation home, be prepared; you might have to pay taxes on it. And this is precisely the case when facing divorce, a situation littered with plenty of options regarding property.
Be prepared to pay some capital gains tax if you sell that vacation home. How much that tax will be will depend on your actual income. So let’s say you don’t have a whole lot of income, and your ex-spouse transfers ownership to you… Sell that vacation home, and you can retain a great portion of that profit down the road.
There is the possibility of a ‘partial exclusion’, though, where you may prove that you’ve lived in the residence for two years or more. If that’s the case, selling the vacation home can earn you 40% of the profit that would otherwise go to capital gains tax. Might be a pretty good option for you as well as the ex-spouse!
Either Way You Look at It, You’re Going to Need to Consult the Experts to Maximize Taxes
A qualified and experienced divorce attorney will help you tremendously regarding that vacation home. Maximize taxes, of course, by registering with an expert from the Income Tax Planning Network. Find out whether or not you want that vacation home on your plate. It all depends on what you want to pay on taxes or not. Because remember: it’s just property. Think of your finances.
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RTO is one thing; what about rental properties? What if you are the landlord/homeowner? What if you are the one offering that rent-to-own property? What if you are the one offering that rent-to-own property, and you get divorced with your spouse? What can you do with those rental properties? How does that affect your taxes? What will happen to your tenants?
Questions, Questions, Questions — Stressful, Stressful, STRESSFUL
Whenever on the subject of taxes, the prospect’s overwhelming. You’ve got that tax return to file. You’re not great with numbers — and let’s not forget about the fact that you’re dealing with divorce, and there are plenty of options on your plate about what to do with the home (and the kids, finances, cars, etc. etc.). Now you have to also worry about rental properties, tenants, and other stuff. It can be a headache.
Here’s what you have to understand about rental property: they’re not your primary residences. Hence tax issues will be a bit different than when considering your actual home, the actual place you live in.
We all know there are tax benefits when selling a home (only when it’s your actual place of residence, though). When you divorce, the question is this: do you want to share ownership of those rental properties (in which case you’ll both pay taxes on them)? Or do you want to transfer ownership to the ex-spouse? It’s good to know that transfer of ownership won’t cause any tax repercussions for either spouse. However, you most likely will pay taxes if and when you ever sell those rental properties; so keep that in mind.
Those Rental Properties Need to Be Addressed
Of course, rental properties are a source of revenue. You want it, you pay property taxes for it; you don’t want it, transfer ownership. If both spouses don’t want the rental properties in question — be prepared. Consult with an attorney, if you will, but be sure to discuss your situation with an expert from the Income Tax Planning Network immediately. You don’t want to leave this loose end untied.
The post What to Do With Rental Properties on Taxes When Getting Divorced appeared first on RentToOwnReviews.
The answer could very well be yes — for obvious tax reasons. Now we’re not saying, though, that taxes will benefit the buyer in this case. Rather, this will be a mutual benefit in selling the home during a divorce, and here’s why: Being Free and Clear of the Obligations The situation has to fit; we’ll say that […]
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