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Assets Frequently Overlooked In A Divorce

Sat, 2006-12-23 16:00 — Michele
Be sure your final agreement divides the capital loss carryover which allows you to deduct your capital losses from your gains. You can also use the carryover loss on a more limited basis to reduce your taxable earned income.

 

PROPERTY TAX BASIS
If you are 55 years or older when you sell your home, California law allows you to transfer your property tax basis to another home of equal or lesser value. This means that if you are selling a home you have owned for a long time and moving into another that is worth the same or less than the one you just sold you may save thousands of dollars on taxes. An example: If you bought your house 10 years ago for $350,000 your assessed value for property tax purposes was originally set at 1% of its value or $3,500 per year. And, your property taxes can only be raised up to a maximum of 2% per year. You sell your house for $650,000, buy another for $650,000 or less and you apply to the assessor’s office to take the property tax basis on the old house.

The kicker here is that if you’re getting a divorce only one of you can qualify for this tax break. So, unless you negotiate this in the divorce, it turns out to be a race to the assessor’s office and the first one there gets the tax break. So, don’t overlook this in your discussions and be sure it is covered in your marital settlement agreement.


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