Denver Property Division Lawyer

Tax Implications in Denver Property Division Cases

At Johnson Law Group, we understand that property division in a divorce involves more than just splitting assets; it requires careful consideration of the tax implications. While the transfer of property between spouses during a divorce is generally not a taxable event, it is crucial to understand the long-term effects. The original purchase price, or "basis," of the asset transfers with the property. This means that when you eventually sell the asset, you will be taxed on the difference between the sale price and that original basis, potentially leading to capital gains taxes. Careful planning can help mitigate these future tax liabilities.

Alimony payments also have specific tax implications, which have changed in recent years. For divorce agreements finalized before January 1, 2019, alimony payments were typically deductible for the payer and considered income for the recipient. However, the tax laws changed significantly for agreements finalized after this date. Now, alimony payments are no longer deductible for the payer and are not considered income for the recipient. Understanding which rules apply to your situation is essential for accurate financial planning.

Retirement accounts, such as 401(k)s and IRAs, often represent a sizable portion of a couple's assets. Dividing these accounts requires a legal document called a Qualified Domestic Relations Order (QDRO). A QDRO allows for the tax-free transfer of funds from one spouse's retirement account to another. Without a QDRO, any withdrawals from these accounts would likely be considered taxable distributions, potentially incurring significant penalties. We can help you navigate the complexities of QDROs and have your retirement assets divided fairly and without unnecessary tax burdens.

How Our Denver Property Division Lawyers Can Help

No matter how similar your marriage and financial situation may appear to someone else’s, you need a unique property division plan. Your attorneys at Johnson Law Group can work with you to protect your rights. When litigation becomes necessary, however, you can count on firm representation in the courtroom.

We Listen

We begin all our property division cases by listening intently to what you have to say about your finances and marriage. Marriage is a two-person commitment and so is divorce. Because of this, the relationship dynamic may also determine how the Denver property division attorney assigned to your case charts the approach.

We Review

If you are a breadwinner or have otherwise maintained a career, you may have access to all or most of the financial documents necessary to begin the process. Dependent spouses may often have a more difficult time trying to access bank statements and file tax returns. Our experienced asset division divorce lawyer can assist you in sourcing the additional documentation. We may also liaise with financial experts if you suspect your spouse may be hiding assets from you.

We Recommend

Once we have all the data we need to make informed decisions, we recommend property division options. You can review this together if your spouse is on board with an amicable divorce. 

Our recommendations may consider the following: 

We Negotiate

In an ideal situation, your spouse immediately agrees to the proposals, and we can move forward with a divorce settlement. Unfortunately, this rarely happens. It is important to note that negotiation is not always bad, so enter the process with an open mind. For instance, some spouses want a clean cut in their relationships. Your spouse may want to offer more currently owned property or cover some of your debts in exchange for doing away with alimony. In some cases, this is a settlement worth considering.

We Protect

We are also committed to protecting family relationships, especially when children or other dependents are involved. When spouses cooperate, this works well. If your spouse takes a combative approach, we try to neutralize the situation before it escalates. Some spouses are committed to making things difficult. When this is the case, we may choose a more aggressive stance to protect your rights.