Changes in the tax laws can affect so many aspects of our lives – how we spend, how we save, where we invest, when we will retire. But, I recently came across an article that surmised the new tax law that went into effect in 2018 will have the unintended consequence of slowing the current divorce rate.
For years alimony has been a deductible item for the payer and a taxable income for the receiver. However, the new code indicates this rule is being changed.
Beginning January 1, 2019, all divorces fall under the new code which shows alimony is no longer deductible for the one paying and the recipient will not need to declare alimony payments as income. While, at first, this might look like good news for the receiving spouse, it is actually not. This is because the total money available to both spouses will undoubtedly shrink.
Experts believe that this new tax law and alimony rule will discourage the spouse with a higher income. Hence, it would not be surprising to see if divorce cases end up getting more complicated than before. *
What will happen is yet to be seen. However, this may impact the sale of a home as well as the ability of the divorcing couple to be able to purchase separate homes. A good, trusted accountant and attorney should be able to assist in navigating this path.
As always, if you or someone you know would benefit from real estate marketing expertise please give me a call. I will take it from there.
*Information is cited from the following
The National Law Review article:
https://www.natlawreview.com/article/family-law-how-new-tax-and-alimony-laws-are-changing-2019
https://www.natlawreview.com/article/family-law-how-new-tax-and-alimony-laws-are-changing-2019