You may be in love with the house now and want to stay, but what if during the next two years, you must sell it? You could end up with an expensive capital gains tax. You might be better off trading the house for other assets.
As if selling a house during divorce isn’t stressful enough, selling assets before a divorce can also be challenging. If not done correctly, there could be serious tax implications. Liquidating assets, though, should be a last resort due to taxes.
However, if you do liquidate assets, make sure you know what you’re dealing with when it comes to investable assets and the costs associated with it. Also, know the cost of a real estate asset and what the capital gain will be when you sell the house. Get a good business valuation and appraisal for any collectibles you may have. Don’t liquidate a 401K or fail to get fair price when you sell an asset. When selling a house during a divorce, again, you also don’t want to acquire a huge capital gain with what you sell.
Keep in mind, you don’t have to worry about taxes if you transfer assets back and forth with your spouse. Collaboration is when you and your spouse decide what something is valued at. In most cases, a judge does not get involved.