New Tax Law May Slow Divorce Rate

Real Estate Agent SL3287291

The New Tax Law that was recently passed may have an unintended consequence of slowing the Divorce rate!!

The information I am providing is intended to provide some food for thought that would spur people to contact their Attorney and Tax Consultant before filing for divorce.

     Divorce is often a very messy event in people's lives. But with the new tax law the situation may have become even more difficult.

Alimony has never been an easy thing to figure out and this seems to be a part of the tax code that has made things sticky.

For years, Alimony has been a deductible item for the payer and a taxable income for the one receiver.

But,accountants and attorneys are still trying to sort this out, the new code seems to indicate that this long standing rule is being changed.

It seems that after Dec. 31, 2018, all divorces will fall under the new code which then will find that Alimony is no longer deductible for the one who is paying. The recipient will not need to declare alimony payments as income.

Since most of those who pay alimony are men and the recipients are women, that the men will take the hardest punch.

However, both parties will actually be affected.

It may end up that neither of them can afford to live separately. The tax deduction for paying alimony allowed the payer to use less money. Now they may not be able to meet the obligation. This could affect the payer's ability to purchase a home.

The recipient may not be able to contribute to their own IRA because funds would need to come from taxed income.

What will happen is yet to be seen.

Many people are scrambling to get their divorce settled prior to the end of the year.

Others, are reaching out to their accountant trying to figure out if they need to adjust their current alimony status.

Attorneys, Accountants and Real Estate agents will need to keep up with what the new tax law really says about divorce and be prepared to advise the consumer.

We as Real Estate agents will want to know how this will impact the sale of the home as well as how will the divorcing couple be able to purchase separate homes.

For more information on Real Estate and Divorce, go to:

Why Do I Need a Real Estate Divorce Specialist




Comments (84)

John Wiley
Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Jeff Dowler, CRS I agree that this situation with divorce is best handled by the professionals who are up to date on divorce and taxes.

Thanks for contributing to the discussion.

May 18, 2018 05:44 AM
Steve Loynd
Alpine Lakes Real Estate Inc., - Lincoln, NH
800-926-5653, White Mountains NH

This puts a spin on the long held truth that your home is the single largest investment we make in our lives... getting married may now qualify as the biggest decision we make.

May 18, 2018 06:09 AM
John Wiley
Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Steve Loynd great comment.

Apparently, the government saw this change in the tax code as a means of raising their revenue, which will amount to $millions.

Tax accountants and lawyers may very well see this as an opportunity and in their search around the law, may simply advise people not to get married. Which in today's world would be an easy sell.

Thanks for sharing.

May 18, 2018 06:22 AM
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

I'm delighted to see this featured John, Congratulations.  I too doubt this will prevent couples from splitting up. In my opinion, the emotional turmoil of divorce often doesn't leave much room for logic and good decision making - when couples ( or one of the partners) wants out, they find a way. Still, it's important knowledge to have and understand to best represent our clients. D

May 18, 2018 07:05 AM
John Wiley
Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Debb Janes EcoBroker and Bernie Stea JD I agree with you in that we should strive to be up to date on trends and changes that can affect the consumer.

If we fail to keep updated, we may give faulty advice.

Since we are not attorneys or accountants, we need to know enough to point our customers in the right direction so they can make the most informed decision possible.

Thanks for contributing to the discussion.

May 18, 2018 07:11 AM
Sheri Sperry - MCNE®
Coldwell Banker Realty - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi John Wiley - You have stirred up lots of conversation on this topic. Kudos!  I have seen couples divorce for tax reasons and others who have stayed married (and lived separately) for tax reasons. Each couple needs to have a tax attorney to explain their options to them so they can make the decision that best fits their needs. 

May 18, 2018 07:15 AM
John Wiley
Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Sheri Sperry - MCNE® I appreciate your contributing to the discussion using your own experiences with divorcing couples. Yes, there are those who pay attention to the financial aspects and ramifications of a divorce.

You state well that they should consult a tax attorney to be sure what their options are.


May 18, 2018 07:44 AM
Chris Lima
Atlantic Shores Realty Expertise - Port St Lucie, FL
Local or Global-Allow me to open doors for you.

Great information John. I keep hearing the phrase "It's cheaper to keep her (or him)."

May 18, 2018 11:04 AM
John Wiley
Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Chris Lima that is funny. But when you see what the rich and famous have to pay out in the divorce, I think your saying would apply.

Thanks for the comments.

May 18, 2018 11:58 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

John I have seen many "pre-nups" in my market... now on a side note I asked our accountant about the Marriage Penalty... it is true if you are not a business owner like a Realtor in Beverly Hills... it did not make a difference...Endre

May 18, 2018 10:02 PM
Barbara Todaro
RE/MAX Executive Realty - Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Good morning, John Wiley more couples are living together and not marrying.... 

May 19, 2018 04:52 AM
John Wiley
Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Endre Barath, Jr. hearing from the experts will add to our understanding.

Thanks for sharing the insights.

May 19, 2018 05:16 AM
John Wiley
Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Barbara Todaro and people say that change is not in the air.

Indeed, according to the Pew Research Center, one-in-four parents living with a child in the U.S. today are unmarried, up from 7% in 1968. A growing share of unmarried parents are cohabiting partners.

Thanks for the comment.

May 19, 2018 05:20 AM
Bruce Hicks
Best Homes Hawaii - Honolulu, HI
Your Best Hawaii Realtor!

It has always been sad to see ANY marriage breakup.  Government is saying how we should run our lives.

May 19, 2018 09:53 AM
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

That's a big change that will affect a lot of people.  Glad it's not me!

May 20, 2018 12:54 AM
John Wiley
Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Georgie, I am glad it is not you that will be affected.

We will have to wait to see what impact the new tax code will have on others.

Thanks for commenting.

May 20, 2018 04:51 AM
John Wiley
Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Bruce Hicks I agree with you that it is sad to see families break up. I think we can see how it has changed so many lives.

Thanks for commenting.

May 20, 2018 04:53 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

John, don't think the tax law changed any emotions for one of my clients - they just received their divorce decree in the mail.

May 22, 2018 06:37 AM
John Wiley
Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Thanks Joan. People who have decided to get a divorce are not easily deterred.

I wish it were not so, but it seems to be the way it is.

May 22, 2018 07:12 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Interesting.  I remember these laws intimately.  I like the new change as it didn't seem fair to claim it as income since it was already taxed by the other party. 

May 22, 2018 09:42 PM

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