Divorce/property
Hi, I own a building with my husband for 10 years, we are still breaking even but our divorce is on hold because of how we want to part ways. I dumped my entire retirement into this building, paid the penalty to come up with the down payment. If we sell, the amount that is left over would be our settlement, I am not looking to not pay taxes but is there something that I can do or say that will lower my capital gain? This is all I have. Your advice would be appreciated. Thank you. also I know I may have made a huge mistake to do this but I did it and now I would like to somehow do the best thing with what I have now. Thanks
Terry Says
Let's not look back. It's too ugly. But here are the facts. You made this as an after-tax investment. The gains will be taxed at the capital gains tax rate. You don't say how the property is titled -- joint tenancy, a limited partnership? That will determine, in part, how much is owed in taxes. But if it is joint tenancy, you are half owner-- get half the benefits, and owe half the taxes -- in theory. What happens if you sell the property while you are still married, and filing a joint return? Seems to me the least your spouse could do is come up with the cash to pay the taxes on your joint return out of his share of the proceeds! Would he agree to this, in all fairness? This is really a financial issue, and it depends on a lot of things that happened over the years. Was the property depreciated (which must be recaptured at sale)? Did you make improvements to the property, which could be deducted from the sales price as part of the cost basis? You need to see a tax expert BEFORE you complete your divorce, as there may be some tax benefits that will benefit you more if you are filing a joint return. Or perhaps, the reverse could be true if a divorce puts you in a lower tax bracket. That's why you need a pro -- your own -- to look over this situation very carefully.
