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Tax ramifications of various property division options

When a Maryland family has amassed a high level of wealth, the process of dividing marital assets within a divorce can be complicated. In addition to ensuring that the division of property is fair, spouses must also consider the tax ramifications of various property division outcomes. This is especially true in cases in which investment properties are owned.

Investments can come in many forms, but any property that generated income for the owner will be considered investment property. Assessing the value of these types of holdings can be a challenge. This is especially true for real estate holdings.

In regard to real property used as rental homes, positive factors such as projected increases in property value and rental income must be weighed against negative ones, such as the risk of a decrease in value due to a slow real estate market, the cost of maintenance and so on. Insurance also plays a role, as does the cost of managing the investment. Many couples use the services of professional appraisers and property management companies to place a value on a piece of rental property. A tax professional can also make it easier to gain a full picture of the true value of any given piece of property.

As the level of complexity of a Maryland family's assets rises, so does the level of difficulty in reaching a property settlement agreement. The outcome of the property division process will play an important role in the financial well-being of both spouses for many years to come. Therefore, this is a matter that deserves careful consideration during the divorce process.

Source:, "Divorce brings its own set of tax implications", Larry Houff, April 29, 2014

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