# Divorce, Splitting Assets, Capital Gains?



## 44Driver (Dec 14, 2010)

A family member is getting divorced and several real estate properties are being split. As one ex-spouse assumes one house and the other ex-spouse assumes the other, how are capital gains handled?

For instance, they jointly own a house worth $300k. One person is buying the other person out for $150k. The house was bought 20 years ago for approximately $100k. Would it be fair to assume that the one being bought out owes capital gains on 300 - 100 = 200, divided in half (the half bought out), $100k ?


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## kcowan (Jul 1, 2010)

Probably close enough. There will be maintenance fees to be deducted from the gross amount and any depreciation will be recaptured.

Also any tax on the gain would have to be calculated based on the tax status of the seller. And capital gain inclusion rates have changed during the 20 years. They probably need an accountant.


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## MoneyGal (Apr 24, 2009)

Typically gains/losses are divided equally on an after-tax basis so that the spouses are left with *net* equalized property. 

However, when the relationship is acrimonious, sometimes this is difficult to achieve. Also, sometimes one or both spouses doesn't really know what their tax position will be post-divorce, so they don't plan effectively. 

There are certified divorce financial specialists - I don't know much about them. I have been involved (as an advisor) in several divorce cases to look at how to handle investment gains and losses.


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## Cal (Jun 17, 2009)

MoneyGal said:


> Typically gains/losses are divided equally on an after-tax basis so that the spouses are left with *net* equalized property.
> QUOTE]
> 
> +1


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## steve41 (Apr 18, 2009)

This is near and dear to my heart.

Of the various applications for a true, tax-accurate, needs-based financial plan, divorce asset splitting/support payment setting is the most relevant. The measure which dictates a fair settlement is after tax income. Based on an estimate of salaries going forward, spousal and child support payments, splitting of RRSP and nonRRSP assets, real estate, etc, the plan(s) which deliver the same after tax income (or close to) to each spouse is, by definition, the fairest.

It requires strict adherence to the rules of income tax, and its calculation methodology (needs-based) is of utmost importance.

(Said he, self servingly)


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