Deciding what to do with your marital home is tough, but you don’t have to face it alone.
Imagine this: you meet someone, fall in love, and begin building a life together. You buy a home, you pour love, sweat, and memories into it. It becomes part of who you are, individually and as a couple.
Now, you’re facing divorce and need to dismantle this shared life. It’s incredibly tough and brings up all kinds of emotions. And yet, you can do it. We’re here to help you through it.
Dividing a house during divorce is tricky.
When deciding what to do with your home (a major financial asset), you can do 2 things: Agree with your spouse about how to divide it and proceed from there – or – take your case before a judge and let them decide.
Agreeing outside of court is always preferable for a few reasons: You remain in control every step of the way, it’s less expensive, and it’s almost always less hostile & emotionally draining.
So, who gets the house?
Whether you agree outside of court or require the help of a judge, there are 3 scenarios that unfold:
- Pay your spouse 50% of the equity in the home and keep the house. If you want to keep the home (often called “exclusive possession of the marital home”) and the other doesn’t, you’ll likely need to pay your spouse half of the home’s equity.
- Sell and split the proceeds. It’s common for both spouses to agree to sell the home and then equally share in the proceeds.
- Joint ownership. Considering joint ownership of the marital home? It’s a great option for financial stability and keeping life steady for the kids. It’s complex, so team up with an attorney to draft a solid agreement.
What about taxes after I sell the home?
After selling, you will face capital gains tax, but don’t worry! There are exemptions.
If you’re filing individually, you can exempt up to $250,000 of your earnings from the sale. For example, if you earn $100,000, you won’t pay any tax on that amount.
If you earn more than $250,000, only the profits above that will be taxed at 15-28%.
Your best bet is to talk to a tax expert who’ll create a plan for you and your situation.
Is there more to know?
Yes! We know this is just the beginning and you have more questions. Dive into our resource library for a wealth of content on divorce-related money and finance issues.
SUBSCRIBE to our 100% free and 100% amazing newsletter where we share our Money Monday tips and Fluency Friday legal-lingo-breakdown.
Stay strong and powerful. Divorce is tough. You’re tougher.
