New York residents who are ending their marriage may want to familiarize themselves with some of the laws regarding divorce, particularly before taking action to sell off a marital property home or other joint assets. Though a good family law attorney or financial adviser will have relevant knowledge on this subject, some people do not consult with a professional until it is too late and actions have already been taken that have a detrimental financial effect.
Additionally, being armed with some basic information about divorce and its effect on taxes can help someone have a more efficient and productive conversation with a professional. As such, it is advisable for people to learn more about these matters prior to attempting to negotiate a settlement agreement.
For instance, individuals should be aware at the outset that legal fees incurred in connection with tax advice can no longer be deducted from taxes, pursuant to the Tax Cuts and Jobs Act which took effect in 2018. By contrast, if someone pays legal fees in connection with negotiating property division, the fees could be incorporated into the tax basis of the property received. The timing of the sale of a marital home will affect how much is paid in taxes, since couples receive more favorable tax treatment than individuals.
In a high asset divorce in particular, it is important to consult with professionals regarding the taxation of capital gains, particularly on securities. Before splitting up an IRA or securities, individuals should determine how much those items will be worth after taxes. A family law attorney can often provide more information on these and other matters.
Subscribe To This Blog’s Feed