For many California couples, considering getting a divorce may be a major step towards the realization that their marriage is about to end. While former couples should never rush to divorce unless there is violence or abuse in the marriage, waiting to get a divorce finalized in 2019 versus 2018 could have an impact on the former couple’s finances, especially if one person wants to keep the family home.
Although not all former couples decide to keep the family home, a person may want to hold on to this asset especially if the former couple has children. Keeping the home potentially means that the children do not have to change school systems and that their transition from one family unit to two family units may be a bit easier. Under the 2018 tax laws, the person who kept the family home was able to deduct a certain amount of the property taxes and a certain amount of the interest on the mortgage.
Under the 2019 tax laws, the amount that the homeowner can deduct will be reduced. This means that it will be more expensive to have ownership of a home. Further, a person who later sells a home will only be able to realize up to $250,000 in gain without any tax implications. As such, those who want their family home may have to consider downsizing or renting if they wait until 2019 to finalize a divorce.
During a divorce, dividing up marital property will be a requirement before the divorce can be finalized. For some former couples, the family home can be a sticking point. A family law attorney may walk a person through the financial implications of keeping or selling the family home, especially if it looks like the divorce will not be finalized until after Jan. 1 as the change in tax laws come into effect.