Separated and divorcing spouses often end up selling their family home as part of their divorce settlement process. While it is normal for people to be very emotionally attached to their houses and what they represent, it is important also to remember that a house is a financial asset that must be treated as such when getting divorced. In some cases, a home may even be a financial liability depending on the amount of money owed on it, the equity that may or may not exist and the condition of the property.
When one spouse considers the viability of keeping the home after the divorce, Forbes explains it will be important for both parties to identify what other assets may be negotiated in exchange to allow this to happen. The person who keeps the house, for example, might forgo any portion of their spouse’s retirement account assets. The valuation of a home will also be essential in deciding whether or not it makes sense for one spouse to keep the house.
Homelight encourages spouses to be honest about what they can truly afford once their divorce has been completed. Home ownership costs a lot more than just making monthly mortgage payments. Insurance, taxes, repairs and maintenance should also be considered. Equally important to evaluate is the cost of selling the home down the road. The capital gains exemption amount for a single person is less than for a married couple and this could eat into a divorced spouse’s equity, making the prospect of selling before the divorce more beneficial.
A final matter to tend to when keeping a home after a divorce is the removal of the other spouse from the title and the mortgage so that the person keeping the property can move forward in a clean manner.