It's a matter of fact that you don't have to pay any income taxes
on assets transferred as a
divorce is processed. However, know this: a
house unfortunately will be handed over to one spouse or the other, only
not tax-free. Why? Specifically, when capital gains taxes still remain relevant,
they apply regardless of a divorce.
As with property law, know this – a married couple won't have
to pay any taxes on a gain of up to a healthy $500K on the particular
residence. However, when you get divorced, you're exempt from half
of that amount. This is important to know given the fact that the house
may sell for more than $250K, for example, leaving you – and your
former spouse – the responsibility to pay the taxes for what's
left in capital gains. That's a sad fact. However….
There's a bright side – a silver lining, if you will –
to all of this, in that if you prepare well ahead in advance and move out
before the divorce is finalized, you may try to seek receiving the proceedings
of the house. If you're successful, you can then claim the house as
your primary residence and not have to pay any of those taxes. The bottom line?
Splitting the house is
hard. Complicated. Utterly difficult. I'd wager to say that dividing that
giant building in half between two bickering people may be a lot harder
than the actual bickering and divorce itself. That's just my opinion,
and I'm sticking to it.