Dividing a House part 1 – Divorce Options

How to Divide a House When You’re Getting a Divorce

It happens; Marriages fall apart. And as if dissolving your union weren’t hard enough, if you own a home together – almost certainly your largest joint asset- you’ll also have to decide what to do with it.

Do you stay, sell, or hand ownership to your ex ?

While there’s no “one size fits all” solution when it comes to dividing the house during divorce, there are multiple options that will allow you to move forward with a roof over your head.

Sell and Split the Profit

Selling the home and dividing the profit is often the least messy of all possible scenarios.

“A lot of financial advisers and attorneys recommend that clients just sell the home, ” says attorney Brette Sember, author of “The Complete Divorce Guide.” “It can often be the simplest way to solve all the problems.  Everyone gets their share, and there is no lingering joint debt to resolve.”

Still, there are some caveats to keep in minds.  First, if you’re trying to sell during a down market, when your house is likely to sit on the market and you stand to lose money, consider moving out and renting the property instead.  Working out the details of who is doing the property management and the terms of how it will all be handled, is something I can help you with as well.

If you’re selling at a profit, on the other hand, you’ll want to watch out for capital gains tax, although the bar is high.  An individual can exclude up to $250,000 in capital gains on the sale of a primary residence, and a married couple filing jointly can exclude up to $500,000. So it will depend on when your divorce is finalized, you might have more leeway.  Those making a profit might also want to consider agreeing to use that money to pay off the legal and moving expenses of your divorce.

That said, many people are understandably attached to their home, or decide that remaining in it is best for the children.  I will discuss this option at a later post.