Taxes are an important consideration when negotiating divorce settlement terms. Texas couples should take care to understand the tax ramifications of how their assets are divided.
What happens to the family or marital home can be a point of contention for many divorcing couples. One spouse may want to stay in the home after the divorce is finalized. It is not unusual for divorcing individuals to not pursue ownership of other assets, such as the retirement funds of an ex-spouse, in order retain the home. However, before any terms are finalized, it is important for divorcing individuals to make sure that they can actually afford to keep the home.
Due to new tax laws, owning a home can be more expensive than people realize. There is a yearly $10,000 limit for the amount of local and state taxes that can be deducted. For homeowners who reside in states that have high property taxes, this means that their tax bill will be higher.
It is also important to be aware that deductions for the interest paid on home equity loans and home equity lines of credit will no longer be allowed unless the funds were used to purchase, construct or significantly improve the home. For example, individuals who take out a home equity loan to pay off multiple credit cards will not be able to deduct the interest.
A family law attorney may evaluate the circumstances surrounding a client’s divorce, consider the settlement terms the client desires and may recommend certain legal strategies to pursue. Litigation might be used to protect the interests and rights of clients who have disputes regarding how much of certain assets like real estate, retirement funds and other high-value assets they are allocated. The attorney may verify how certain assets, such as workplace retirement funds, are to be properly divided.