financial advise

edwal

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Mar 20, 2012
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Bayfield
So... just got divorced and I have some financial questions.
1. Capital gains. We are selling the house but how does this work with a divorce? I hope to buy an another home just not sure how long it will take me.
2. I will pay out $800 a month for 5 years for "spousal support". I will pay it monthly with profit from the home sale but what would be the best way to save / invest this in which I can still make monthly payments? I'm just trying to cut my losses by hopefully making some in interest on this money for several years. Thank you , Ed
 

awasome

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Apr 29, 2021
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1. If the home is your primary residence, you should not have to pay capital gains taxes on it. However you will have to pay taxes on the profit of the house, but there are exemptions depending on single/married. Not sure how this will be effected in a divorce.

2. If you plan to use the profits of the sale of the house to pay out the spousal support for 5 years, I personally would just use a money market account with a decent interest rate between 1-3% is considered really good. I would avoid using mutual funds even index funds as there is risk of losing money in the short term.
 

wind gypsy

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^ this. But I'll throw in my unqualified input since we're chatting about it casually.

If you lived in the house for at least 2 of the last 5 years you are exempt on at least $250k of any capital gains on profit (house value gain above any costs for improvements you made). Married filing jointly get a $500k exemption so i'm not sure how it works in the case of a divorce.
 

Broomd

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1. If the home is your primary residence, you should not have to pay capital gains taxes on it. However you will have to pay taxes on the profit of the house, but there are exemptions depending on single/married. Not sure how this will be effected in a divorce.

2. If you plan to use the profits of the sale of the house to pay out the spousal support for 5 years, I personally would just use a money market account with a decent interest rate between 1-3% is considered really good. I would avoid using mutual funds even index funds as there is risk of losing money in the short term.Numbe
Your first point is contingent on the length of time that OP lived there. Last I checked two years of uninterrupted dwelling were required.
Ed, this is why you should get professional help with your concerns. This forum can be helpful to some degree, but do it right.
 
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OP
edwal

edwal

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Bayfield
Thank you, yes lived in the house for 10 years. I plan on getting professional help just wanted to at least hear some advice and some thoughts so that I can be familiar with what we discuss. I know the return won't be much but I know her and she will not give me more than the minimal discount the attorneys talked about, and honestly I'd rather have the money with me and just set up scheduled monthly payments. Just trying to understand and cover all my bases. Thank you.
 

roadrunner

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but I know her and she will not give me more than the minimal discount the attorneys talked about, and honestly I'd rather have the money with me and just set up scheduled monthly payments.

It's sickening when they (ex's) come out smelling like a rose. Doesn't help, I know, and probably shouldn't have said anything...:censored:
 

LoveBigRacks

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Sep 9, 2021
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Those suggesting CPA / attorney advice are spot on.

FWIW, HM Bradley has a high interest savings account where you can get 3% a year on up to $100k of deposits if you meet certain deposit thresholds (direct deposit required, no min amount though) and maintain a minimum balance.
 

Bl704

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Fwiw - my neighbor 'bought out' his wife's share of the home... He funded by taking a loan from his 401k (which I don't suggest), but if you're sitting on liquid assets (cash, heck, even equities) it may be something to put on the table of either of you want the place.
 

Poser

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I just did the math. $800 x 60 = $48,000

If you're gonna have $48K left after sale of house - talk with atty & pay it lump sum. Then walk away without looking back.

Seriously, make the clean break. It'll be better for your head.

I was going to suggest the same. Being free and clear of her, assuming there are no kids, offers a tremendous value to your mental and emotional state. You’ll be able to move on completely. I’d look at this as debt and aim to clean it up ASAP.
 

KineKilla

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Apr 8, 2020
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Utah
I'm with Rich M. Pay her off in one lump sum and be done with it.

She may or may not accept a lower lump sum but you can try. She may want you to make monthly payments in order for her to avoid some type of tax penalty as well. Not sure on that.

Having to send money to an ex for 5 years after a divorce sounds bad to me. What if you fall in love and your new wife doesn't like the fact that you're sending your ex monthly payments? Could get sticky.

I vote for ripping the band-aid off in one fell swoop.

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Kimber7man

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Hamilton County, Indiana
Don’t keep anything that is in both of your names. Sell it all and get a release of lien, and start with new loans/titles etc…
Dont want a debt she doesn’t pay to be on your shoulders.
 

gabenzeke

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Oct 28, 2015
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407
My wife is a divorce attorney, all I know is you should definitely run through all your options with your attorney. I've heard of way worse results than 5 years/800 a month. Keep your chin up!

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Crowmangler

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Aug 4, 2019
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North Carolina
Marriage is love.. Divorce is business. Treat it as such.
Have your attorney negotiate with hers & offer less total $$ lump sum payment. I would just about guarantee she'll take it. Instant gratification!
Break it off clean & don't look back. Good luck.
Sorry you're having to go through it.

"Never enter into a contract in which the other side gets rewarded for breaking it"
 

2ski

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Bozeman
I think you should go to Vegas, bet it all on black and see what happens. 😆
100% kidding
 

roadrunner

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Timberline
She may or may not accept a lower lump sum but you can try. She may want you to make monthly payments in order for her to avoid some type of tax penalty as well. Not sure on that.

-Or- setup of "dummy" bank account that has an auto payment to her. Deposit the lump sum into the account plus an additional $1000 or so to keep it form zeroing out. After 5 years, close the account.

With an auto payment, you will rarely be bothered with having to think about it.
 

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