Figuring out who gets the house after a divorce can get messy
This article looks at how to handle the house in a divorce and whether keeping it is a good idea.
One of the biggest financial assets most couples have is the family home, which makes deciding who gets the house often such a contentious issue during a divorce. While many divorcing spouses look at holding on to the house as a “win,” the truth is that deciding who gets the house – and whether they should even want it – is a complicated issue. Below is a look at some of the solutions for how to handle the house during a divorce and the benefits and drawbacks of keeping it.
Sell, buy or share
As Realtor.com points out, the easiest solution in most divorces is for both spouses to simply sell the house and split the profits. This is often the fairest solution and leaves the least room for disputes to arise. There can also be financial benefits to selling the house as a couple. As CNBC points out, for couples selling the house the capital gains tax exemption is $500,000, whereas it is just $250,000 for those selling individually. However, it can be emotionally painful to sell off the family home and for those who want to keep their children in the same school then moving houses may not be a good idea.
Another common solution is for one spouse to buy out the other spouse’s share in the property. Buying out the property will require the home to be appraised and it is important that both spouses agree that the value of the home appraisal is fair.
Alternatively, the two spouses could continue to live together under the same roof. While this is usually not an ideal situation for most couples, it could be an option if one spouse doesn’t yet have the resources to buy out the other spouse or if the spouses want to wait for the real estate market to turn around to make selling more profitable.
Is the house a “win”?
Many people have a strong emotional attachment to their home, which can make it difficult for them to sell it or move out. Indeed, there are times when there may be practical reasons for keeping the house, such as wanting to disrupt the children’s lives as little as possible.
However, it is important to remember that the house is a risky long-term asset. The real estate market is volatile and a house comes with many expenses that other financial assets, especially liquid ones like pensions, 401(k)s, and investment funds, don’t have. Divorce is already difficult enough and it is important that those coming out of it have the financial resources they need to get by. Often, that means letting go of the house and opting for a share of the property that provides the best long-term protection.
Divorce is an extremely difficult event for anybody to go through and knowing how to make the right decisions can be especially hard during this time. A family law attorney can assist those going through a divorce in a number of ways, including by advising them on how to divide their property in such a way that their long-term best interests are protected.