November 10, 2021

Your home is your biggest asset, and more likely than not, you share it with your spouse. In the case of a divorce, how will you manage to split your biggest asset? Houses are complicated because they can’t easily be divided and shared. Is your only option to sell and split the proceeds?

Is Your House Marital Property?

Was the house bought together during your marriage, or was the house bought by one spouse prior to the marriage? Marital property has to be split 50/50 in states with community property laws. While there are exceptions, most states will consider the house marital property, even if it was purchased by one spouse, if the other contributed to the mortgage payments and home maintenance. The courts will try to be fair.

Advantages to Selling Your House Before or During the Divorce

First, you’ll need to figure out the timing. If you and your spouse agree to sell the house before the divorce, it will allow you to get the proceeds as a married couple, which will give you tax benefits. You will also have the cash on hand to hire a divorce attorney or live separately during the proceedings.

Once you have filed for divorce, you cannot sell the house unless you get a court order. It is possible to sell during the divorce and split the proceeds, but it will likely increase the time it will take to sell the house and finalize the divorce.

Advantages to Keeping the House Until After the Divorce

Selling a home is much more difficult to sell during a divorce, especially if spouses are not getting along. There will likely be disagreements over staging, hiring a realtor, accepting an offer, and more.

If you decide to sell your home after the divorce, you may find that you are able to make smart financial decisions together, since neither spouse will be able to use the house sale in negotiations. However, dividing the proceeds after the divorce won’t allow you to take advantage of the tax benefits.

Buying Out Your Spouse

If one spouse wants to stay in the home, that spouse will usually get the option to “buy” the other spouse out of the home. Often the custodial parent will want to stay in the home with the children to minimize their disruption. However, this isn’t always easy. It will likely be a financial stretch for one spouse, and the other takes a risk in losing out on further proceeds of the home by walking away. In some cases, one spouse may agree to keep the house but give up marital property of equal value, such as a savings or retirement account.

What if We Don’t Agree?

If you and your spouse cannot come to an agreement, the judge will likely make the decision, and in many cases, will require the home to be sold to a third party and the proceeds split. Your divorce attorney can help you negotiate with your spouse to avoid having the decision made for you.

Talk to Your Divorce Attorney About Which Option is Best for You

Divorce is emotionally messy, but it can also be financially messy, especially when it comes to your home. You and your spouse are likely both emotionally attached to the house, and since it is a large asset, neither spouse will want to “lose” their share. Your divorce attorney can guide you through the process in a way that will set you up for the best possible outcome.

It is important to choose a divorce attorney who you trust, and to remember that a civil divorce is in the best interest of both you and your ex-spouse. Using an attorney or mediator can help you come to the right decision. If you need a divorce attorney, or you’re currently going through a divorce and have questions about the process, contact my office today.