What if a refinancing is buying out separate property?
All refinancing proceeds are treated as marital property. Therefore, if the refinancing will buy out separate property, then you will need to create a second real estate property to reduce the marital property balance and increase the separate property balance. In that second real estate property, which you may describe as “Refinancing Offset,” you would […]
How do I handle depreciation recapture?
If a real estate property was rented or used for business, and then is sold, there may be depreciation recapture on the rented portion. Depreciation recapture provides that some of the gain on a sale of real estate is ordinary income. It applies if a method other than straight line was used to depreciate the […]
What if part of the home was rented before sale?
If the couple did not live in the rented part for 2 of the 5 years before the sale, treat the sale as if it were the sale of two properties. Enter one as a rental property, and enter the other as a personal property. Divide the value and mortgage proportionately between the two properties. […]
What does the software use as the price at which a real estate property will be sold in the future?
A real estate property is sold for a price equal to the property’s value in the year of sale. The software automatically calculates this value. It does this by starting with the current value and increasing that value each year by inflation, or by another rate of appreciation if you have entered it. You enter […]
How do I indicate that a real estate property (home, marital residence) will be sold?
On the real estate property, click “more info.” At the top of the screen, answer the question to indicate that the property will be sold. Scroll down to the section on sale of the property, and enter the expected date of sale and other information.
How does the mortgage interest deduction work when the parties are separated?
It depends on whether the parties hold the asset in joint title, or whether only one party is the owner. Joint title If the parties hold the property in joint title, half of the mortgage payers’ payment counts as alimony income to the other party. The other party then also gets a mortgage interest deduction […]
Why is the pension income not correct?
There are several reasons why the income from a defined benefit pension plan that you see on the Budget Report may not be what you expect. 1. There may not have been any pension allocation between the parties. In order for the software to know how to carry the pension payments, you must specify how […]
What should I assume with respect to how long the participant will work, and when she will retire?
Let’s look at the hypothetical case of a male state trooper who has been working 10 years. Let’s say that his accrued pension benefit is $2,500 a month. If he works another 10 years, his accrued pension benefit will be $4,500 a month. He is 52 years old and seems likely to work until regular […]
What if I have an employer statement of value that differs from the pension calculation?
“Statements of value” from employers are almost always different than true actuarial pension value. They are usually lower than the true actuarial value. You can use the employer’s statement if: Otherwise, just ignore the “statement of value” from employer, and use our pension valuation. Why would the lump sum value offered by the employer be […]
What if the COLA does not start immediately?
This note explains how to value a pension where the COLA does not start immediately. Let’s say the COLA begins after 3 years. Create three pensions. For each pension, everything is “actual,” as it is for your one pension, except as follows: A: No COLA. B: Retirement age is 3 years later than actual (or […]