Most people who file for divorce in Colorado tend to focus on the impact that the divorce will have on their children, their basic finances and their immediate situation. However, there’s another aspect of divorce that many people overlook: taxes on capital gains. If you come out of your divorce making a profit, you might have to pay taxes on it.
How does divorce relate to capital gains taxes?
When you make money off an investment, the government sees this as a form of income. For example, if you buy a house, wait several years for it to appreciate and resell that house for a large profit, you’d have to pay capital gains taxes on the proceeds. Since filing for divorce often involves selling properties and gaining assets, you might have to pay taxes on the proceeds when it’s all said and done.
For example, many people end up selling their house after they get divorced. If you want to stay in the house, you might be able to buy your spouse out of it or offer another asset in exchange. However, if you decide to sell the house anyway, you might have to pay capital gains taxes on the profits. This could be up to 15% of the proceeds.
Family law requires spouses to divide up their assets during a divorce. You won’t have to pay taxes on assets that change hands during the property settlement, but you will have to pay taxes if your assets have accumulated value. For example, if you receive stocks that your former spouse bought years ago and you sell them for a profit, you’ll have to pay capital gains taxes on the proceeds. Talk to a divorce attorney for more information about the process.
Do you need an attorney when you file for divorce?
Even if a divorce is amicable, filing for one is much harder than most people realize. You could schedule a free consultation with an attorney to see how they might help you through the procedure. If you’re not satisfied, you could interview multiple attorneys in your area until you find the one who is right for you.