– from Thomas V. in Richfield, WI

Question Details:

I am currently going through the divorce process with my ex-wife. We haven’t gotten to the point of dividing our assets or property yet and I’m not quite sure how it will affect our taxes. Are there any tax consequences when dividing the property? I’m most concerned about things like our house that we own together and our vehicles.

Family Law Attorney Response:

That is a great question and I would be happy to help you out. It is certainly something that is great to know and understand before you get to that stage of the divorce.

Generally speaking, most property transfers are tax-neutral. This simply means that that the person receiving the property would not owe any taxes on the property. They also would not receive any tax benefits from the transfer either. So in your case, if you are dividing your property and your ex-wife is keeping the house, she wouldn’t have to pay income tax or capital gains tax for the transfer. She would also be excluded from gift taxes.

If you are selling the house, it gets a little more complicated. You and your ex-wife can each exclude the first $250,000 of gain from your taxable income. There are other scenarios that could affect the taxes when selling the house. Without knowing more, it would be hard to go into greater depth. Hopefully this gives you a better idea about how the taxes work when dividing the property during a divorce. I could go into greater depth on the topic if you still have more questions. Just let me know, I would be happy to help you out.

Lawyer Jeff Hughes from Sterling Law Offices, S.C.
Jeff Hughes, J.D.

Managing Partner

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