The division of assets and liabilities in a marital estate does not usually lead to tax indebtedness. However, certain aspects of the divorce, such as alimony and sale of assets, may produce tax consequences. A divorce lawyer can help you determine if any tax liability will be incurred in your settlement, and if so, whether it should be taken into consideration in the valuation of the marital estate.
Alimony and Spousal Support
Alimony is usually tax-deductible from the income of the paying spouse. Conversely, it is usually applied as income and taxable for the receiving spouse. That said, sometimes the matter is not quite so simple. It is important to make sure that alimony considerations are spelled out in the divorce decree and include appropriate language. Otherwise, payments made to spouses may not be tax-deductible.
Sale of Assets
Often one of the parties in a divorce gets the house in the settlement. There is no tax liability on the property until it is sold. However, if the spouse plans to sell it right away tax will likely need to be paid. In such a case it may be best to keep this in mind when valuating the marital estate. However, a Los Angeles divorce lawyer will determine whether the court in your jurisdiction will allow such an inclusion.
Sale of other property, such as recreational property, may also leave a tax liability. Any amount in the sale price that is above what it was purchased for will be taxed.
If You Need Legal Help
Lisa Zonder is a dedicated and compassionate Los Angeles divorce lawyer who will help you through this difficult time. If you are seeking a divorce or have further questions, call Zonder Family Law to arrange an appointment today at 818-309-7059.