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Will your property be taxed when it is divided?

As you and your spouse divide your property, you may end up "gaining" assets. This is because your assets are typically split fairly evenly, so, if your spouse was actually earning more than you were, you could end up with more money than you earned after the division. You could also end up with assets that you thought of as belonging to your spouse more than they did to you, because the court sees everything as belonging to both of you.

With this in mind, you may be wondering if those new assets are going to be taxed. In most cases, you'll be glad to know that the answer is no. Though you may feel like you gained something, the government does not view this as income, and therefore, it won't be taxed.

There is one notable exception, and that is when you get money on a recurring basis. For example, your spouse could agree to pay alimony to you for the rest of your life in exchange for getting more of what he or she wants in the divorce. You get the checks once a month, rather than getting a lump sum up front.

These alimony payments are then looked at like any other income by the government. You have to report them as such and pay taxes on them every year. Your spouse can then write them off as deductions, as they are losses on his or her end.

When agreeing to any property division proposal, make sure that you look at all of the legal and financial implications of that agreement in New York.

Source: Huffington Post, "Divorce and Money," Terry Savage, accessed Aug. 07, 2015

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