Addressing the division of assets in a divorce can be a contentious issue. However, before Georgia couples agree to any terms regarding how their assets are to be split, it is important that they first consider the tax ramifications of their decisions.
Wanting to maintain ownership of the family home after the divorce is not an unusual occurrence. In fact, spouses may agree to not pursue their portion of other types of assets, such as their share of the ex-spouse’s retirement funds, in order to have ownership of the home. But thanks to changes in the tax laws, owning the home may be more expensive than they thought.
For homeowners who reside in states where the property taxes are high, they may find that their taxes will increase, as there is a $10,000-per-year cap on the amount of local and state taxes that can be deducted. Homeowners will also no longer be able to deduct the interest on home equity loans and home equity lines of credit unless they use the funds to purchase, build or significantly enhance their home. If the funds are used for some other purpose, such as paying off high-interest credit cards, the interest cannot be deducted.
People who are covered by a health plan provided by their spouse’s employer should begin searching for their own coverage as soon as possible and before the finalization of their divorce. If necessary, they may extend their spouse’s employer-provided coverage through COBRA for up to three years.
A family law attorney may advocate on behalf of clients whose desired divorce settlement terms include staying in the family home. Litigation may be used to ensure that the rights and interests of clients are protected regarding the division of assets, including real estate and financial accounts.