Divorce can be messy, from a financial standpoint. It can also be very stressful, and can take some time to complete. With that in mind, there are often nuances and subtleties that people overlook. One of these issues is capital gains tax on divorce settlements that include a real estate transaction. For example, many people who divorce sell their homes, and they split the amount of money they receive from the sale. That makes things fair and equitable.
When they have Pensacola, FL investment property, though, that can change the game. Investment properties are subject to capital gains tax when they are sold, and that tax amount can be very high. If there is a large gain on the sale of the property, the amount owed could easily be into the thousands of dollars. Who pays for that can depend on several factors. If the divorce decree spells out who is liable for that tax, that will settle the issue regarding the property for sale. The decree must be followed.
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If there isn’t anything in the divorce decree about the property or properties for sale, though, there may be a fight regarding who has to pay the capital gains tax. It could come down to whose name the property was actually in, and/or who played a more significant role in the management of the property. Often, it will be up to a judge to decide the outcome. Before any of that takes place, though, the property has to be sold. Rather than list it with a real estate agent and wait for months, you can contact a company that buys property for cash. Often, getting it sold quickly is just a phone call away.
There’s a lot less to worry about when the property is sold for cash, and the closing will be much faster. That can be a very popular option in a divorce, when people are looking to break all of the ties they had to one another as fast as possible. Owning joint property can make it feel as though they are still married, and that is usually the last thing they want to deal with. With a cash deal, you won’t need to wait for months and compete with all the other properties for sale and the multitude of MLS real estate listings.
Instead, you’ll work with an investor or company who wants to buy the property quickly, and for a fair price. Before you know it, you’ll be out from under the property, and you won’t have to be tied financially to your ex-spouse. That doesn’t solve the matter of the capital gains tax, though. If you both owned the property equally, the tax should be divided equally in many cases. However, every divorce is different, and there are often extenuating circumstances. For example, one person may have had a very good job, and the other may have been a homemaker. The distribution of money could be very different for those individuals.
It’s best to work with your divorce attorney regarding who might have to pay what amounts, so you won’t get caught by surprise when the property sells and capital gains tax is owed. It’s much better to be prepared in these types of situations, as much as possible. Then you can sell the property quickly, know where you stand with taxes, and move on with your separate lives, after the divorce is finalized. Dragging out a sale on a property can make the divorce process worse, but a quick sale can help bring peace of mind and closure.
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