Who Pays Capital Gains Taxes During A Divorce?
Unless you’re a tax professional, chances are capital gains taxes during a divorce are confusing. There are many rules surrounding capital gains. Here are a few:
- Capital gains taxes may occur when you sell an asset for a profit.
- The percentage of capital gains taxes you owe depends on your tax bracket.
- During a divorce, there is an exemption up to a certain amount on your primary residence, but you need to have lived there for a specific amount of time. Contact a professional for more information.
- Financial investments (stocks, bonds, mutual funds, ETF’s) may have “unrealized” capital gains – which will be taxed upon sale. They should be taken into account when dividing these assets.
Navigating Capital Gains Taxes During a Divorce
Divorce can create a lot of confusion about your financial picture. You are dividing or signing over your rights to assets and navigating the complex process of who gets what. Things can get overwhelming quickly. If you have to sell the family home or other properties, you may be concerned about paying capital gains taxes. There are several questions that are helpful to ask a financial professional.
- Which party is responsible for the capital gains taxes?
- How do we clearly spell out who pays what?
- How much will the capital gains taxes be?
- Is there a more tax efficient way to handle the sale of our house(s)?
- We’ve lived in the primary residence a long time, how much of the profit can each of us exclude from capital gains taxes?
- Should we continue to co-own the home?
Each situation is unique. Consulting a financial professional can allow you to understand the benefits and consequences of your decisions. A professional will be able to review your situation and offer options, as well as the advantages and disadvantages of each. Navigating this situation with a professional can prevent miscommunication and allow each party to make informed decisions.
Tax Settlement in Mesa, Arizona
If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation.