For those living in North Carolina who are thinking of filing for divorce, it would be a good idea to consider the timing of the separation and how changing laws may affect the outcome. With the passage of the new tax code, some may find it more advantageous to finalize their divorce before 2019. To help make sense of the confusion, there are some important aspects to keep in mind.
Exes who decide to keep the marital home as a financial asset won't be able to deduct as much of their property taxes and mortgage interest. In fact, many won't be able to deduct any portion of these items under the new tax laws. Selling could be the best option before divorce as married couples are able to realize a capital gain of up to $500,000 before any taxes are due.
Prior to the new tax laws, those who paid alimony were able to deduct the payment on their tax return, and those who received alimony were required to claim the payment as income. As of 2019, alimony will no longer be deductible by the payor or reportable by the recipient. If alimony is finalized in 2018, however, the payment could be a significant deduction for high-earners for years to come.
It is likely that new tax laws will have a big impact on prenuptial agreements and could even void some previously agreed-upon items. Any pre-arranged alimony agreements will be impacted by the tax reform and would need to be reviewed for necessary changes.
Changing tax laws can make an already complex situation even more difficult. However, working with an divorce attorney could be a tremendous help in achieving a beneficial outcome.