Statistics provided by the American Psychological Association (APA) show that approximately 40% – 50% of couples in the United States get a divorce. Unfortunately, all couples who go through a divorce must go through the difficult process of dividing up marital assets. For many people, this includes a home. In fact, 78.2% of married couples owned homes in 2015. If you’re facing a divorce and you own a home jointly with your spouse, be sure to understand all the options available to you. In this post, we’ll discuss the options you should consider, as well as some pros and cons with each.
When is the Best Time to Sell Your House During a Divorce?
Fundamentally, there are three options for your house when going through a divorce:
- Sell your house before the divorce
- Sell your house after the divorce
- Keep your house after the divorce
Let’s examine each of these options.
Selling Your House Before a Divorce
Selling your house before your divorce is finalized has several benefits. For one, it’s easier to split money between a divorcing couple than it is to split a house. If one party wants to stay in the home, it is likely that the home would need to be appraised to determine the fair market value. Once this is done, the spouse who wants to stay would need to “buy out” the other spouse for the appropriate amount. Oftentimes this is a messy and time-consuming process.
Another benefit to selling your house before a divorce is that you can take advantage of a higher tax write off as a married couple than you can as an individual. If you and your spouse are married filing jointly, you will be able to write off up to $500,000 in capital gains on the house (assuming it is your primary residence). If you are single, the amount is capped at $250,000.
Selling Your House After a Divorce
While uncommon, this option may make sense if the real estate market is particularly weak in the area where the home is located. While home prices tend to go up over time, they do fluctuate. If you happen to be going through a divorce during a down real estate market, you may benefit from holding onto your property until the market recovers. This will allow you and your ex-spouse to get more money for the home.
While getting the highest price for your house is nice, you should consider the logistics that go along with jointly owning a house with your ex-spouse after a divorce. For example, you will have to agree on who will keep up with maintenance and repairs. Also, the house will need to be sold eventually, which will require jointly working together with your ex-spouse at some point in the future. If you want to put the marriage and the house in the past, waiting until after your divorce to sell your house may not be the right choice for you.
Keeping Your House After a Divorce
When going through divorce proceedings, the concept of “equivalent exchange” comes up frequently. Equivalent exchange is used when one spouse intends to keep an asset that cannot be easily divided (i.e. a house). It’s certainly possible for one spouse to remain in the home after a divorce. In this case, that individual would give up his/her share of other assets equal to the value of their spouse’s share of the property. This would be the equivalent exchange. Once the value is determined and the spouse completes the necessary paperwork to take full ownership of the home, the problem is solved.
What’s the Best Option for Selling Your House When Going Through a Divorce?
The answer to what you should do with your home during a divorce truly depends on your unique situation. This post is intended to be a helpful starting point, but you should also consult a CPA and an attorney to make sure you are making the right choice. If you do decide you’d like to move past your divorce by selling your Pittsburgh home, contact us to get a cash offer today. McIntosh Management, LP buys properties for cash quickly, and can help you move past this difficult time in your life.