Legal Question in Family Law in California
Property Settlement
When the community property is sold and the equity divided do you have to re-invest the money? Also is there Capital Gains tax that has to be paid? If so what is it based on, the price the property was sold at or the divided amount I receive?
2 Answers from Attorneys
Re: Property Settlement
The previous answer is correct. You should discuss this with a CPA or Tax Attorney. It is my understanding that unless your Marriage Settlement Agreement or Judgement says otherwise, if the tax responsibility is divided equally, than you would be responsible for half. However, under the current tax laws regarding sales of principal residences, if you lived in the home for two of the past five years, the first 250,000 is tax free for single individuals and 500,000 for married couples. However, there are some important factors which you should discuss in detail with your attorney or CPA.
Re: Property Settlement
Your question is very complex, and should be discussed with a cpa or other tax preparer. It is my understanding that the tax consequences would be the same as if the property was sold, and there was no dissolution of marriage. There are some exceptions to this rule. You need to discuss the specific facts of your case with your tax person.
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