A recent article reminds Georgia couples that the division of martial property may bring unwelcome surprises around tax filing time. Needless to say, a divorced spouse will likely have different exemptions and deductions, due to the property division ordered by the divorce decree.
To avoid nasty surprises, a spouse may benefit from having an experienced divorce attorney review any proposed divisions of real estate, as well as any financial figures provided by the other spouse. For example, another spouse may provide conflicting real property estimates. Even a municipal taxing authority’s valuation might be a source of dispute.
An attorney will know when an independent appraisal is required to determine a home’s fair market value. A common starting point for real property valuation is comparing a property to other homes in the community that have recently sold. From that starting point, the appraiser may adjust up or down, depending on a home’s additional features. It may also be wise to get an appraisal close to the finalizing of the divorce, as the real estate market can fluctuate.
Another property division agreement that may carry hidden tax or other financial consequences is agreeing to give up cash or liquid assets in exchange for staying in the family house. In today’s housing market, any equity in a house may be depleted by its current market value — called an underwater mortgage — and it may not be affordable to remain in the home.
Finally, an attorney may also recommend that a divorcing spouse obtain a retrospective home appraisal — an estimate of the home’s value at the beginning of the marriage — in order to account for a gain or loss during the marriage. Throughout a divorce proceeding, an experienced divorce attorney can assist with these and other property division issues.
Source: Huffington Post, “Divorce Tax Tips: Five Most Common Tax Questions,” Joseph E. Cordell, Jan. 29, 2013