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1031 + unrealized capital gains + divorce = tax trouble |
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Real estate investing is a long-term game and often people forget this basic fact when planning their investment srategies. If your married or living common law you might want to review these points before jumping in with 2 feet into your next rental property.
Divorce is a messy process that leaves distruction in its path. If you have accumulated real estate investments using 1031 tax deferred exchanges you may have trouble continuing to defer your taxes if it comes time to split maritial assets. Unless you have solid pre-nuptual agreements in place or other significant assets that can be allocated so as not to force a sale of your investment real estate, you and your soon-to-be ex may be in line for a big tax bill. The best advise you can follow if you find yourself on the brink of divorce is to seek competent legal and tax advise. Without it, your real estate investment will be the least of your worries. |
