Terminating your marriage forces you to make several decisions that will affect your life for years to come. If you and your spouse own your home, one of these important decisions is what your and your spouse will do with any real property, meaning a house or other real estate, owned during the marriage. In some instances, a house is an asset to which emotions are heavily tied. Besides the emotions involved, there are also financial and tax consequences to consider.
Selling the house
Selling a house is always an involved process, but especially so when you jointly own your home during the termination of your marriage. You have to decide if you can work together to hire a real estate agent and split the costs, and how you will divide the proceeds of the sale as part of the marital assets.
Keep in mind that if you file income taxes separately, you each can exclude the first $250,000 in capital gains from the sale of the house, as long as it was your primary residence and you owned it for at least two years.
Keeping the house
For one spouse to stay in the house after divorce, that person may have to prepare to pay the mortgage and property taxes on their own income, instead of paying these bills with two incomes. Often this means that the spouse retaining the residence will have to give up other assets or obtain a mortgage or Home Equity Line of Credit on the house in order to pay the other spouse for their half of the marital value of the home.
Discuss these options with a family law attorney so that you know which options would work best for you.
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