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Keep or Sell the Family Home During Divorce? 5 Questions to Ask
By Nancy Kay, Moving Forward Through Divorce
Published On: 5/27/2013
The decision to keep or sell the
family home during divorce can become an emotional power struggle and an
ongoing source of conflicts and negotiations between a husband, wife and their
mediator or attorneys during the long path through divorce.
Since divorce causes many
disruptions to all the parts of a person’s life, it’s not surprising that most
people want to stay in their current home for security, continuity and
practical reasons and to keep their children’s lives as stable as possible
during this challenging time.
Reaching a joint decision about whether to
keep the family house or sell it is a huge decision that leads to emotional,
financial and tax consequences so it’s wise to consider the overall situation
and consult with experts who can provide you with objective advice about what
the financial and tax consequences will be.
In some situations, there is no choice about
whether to sell the home or not. During my own divorce, a family court judge
I’d never seen issued a written order that we list our marital home for sale
within 30 days just 3 months into our lengthy divorce because my husband’s
income had decreased due to a lay-off and his insistence that he wanted to
start a new business, rather than look for another job position.
I suddenly found myself having to find a rental home right away for
myself, 3 kids and a big dog that was also within my children’s school district
and on their bus routes. This move ended up costing me just as much in monthly
rent payments as our much larger marital home payments had cost per month even
though the rental home was much smaller.
If you are faced with the decision about
whether to keep or sell the family home due to divorce, here are 5 Tough
Questions to Ask to help you decide:
What are your housing options where you live? Will the cost of the house payments be about
the same, more or less than a similar place for rent when you figure in the tax
deductions for mortgage loan interest? Are there rentals available where you
live that meet your needs and are in the same school district? Can you afford
the costs associated with moving and/or storing items if you move into a
2. Do you know what your house is worth in your
current real estate market? Are you
under water when it comes to equity or can you afford to pay off all of the
mortgage loans on your home plus cover the costs of selling it and moving?
Consider consulting with your lender, some real estate agents to find out what
comparable homes are currently selling for near your home and hiring a real
estate appraiser for some outside opinions to find out for sure.
3. Can you really afford the house on your own
when the divorce is over?
Deliberating over this can truly be painful. No matter how much you may WANT to
stay in the home, your financial situation will likely become much tighter
following divorce. Do you know if you’ll
be able to qualify on your own income to refinance the mortgage into your own
Rising real estate taxes, utility bills, home
repairs, maintenance and landscaping can chip away at your new single person
budget, making it harder to save for other things as you start your new life.
4. Could you be better off taking other assets
in exchange for your share of the family home? The tax man cometh and the tax man then
taketh away when it comes to selling homes, retirement funds, stocks and other
assets. If you keep the house now and later sell it on your own, you could end
up with a hefty capital gains tax bill depending on how much your home sells
for at that later time. It’s smart to meet with a tax accountant or Certified
Divorce Financial Analyst (CDFA) to figure out the various tax consequences
that could result from selling or trading both assets and liabilities during
5. Consider the many benefits of making a clean
break by selling the marital home. There won’t
be any worry about whether or not either person can qualify on their own income
to refinance it into their own name. You
can use your share of the profit from the home sale to prioritize your new
find yourself in an upsetting flashback in the kitchen one night, remembering
that terrible fight you had right near the sink.
There won’t be any reason to worry about your
former spouse inviting his new love interest into the home you had previously
You can downsize, buy a fixer-upper, try a
different floor plan or move into a new community where you and only you now
have the keys to unlock your new front door.
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