Selling a house during a divorce can be complex and emotional. One of the biggest decisions that divorcing couples face is what to do with the family home. This is where some of your happiest memories are. Where your children learned how to ride a bike. Where you cooked dinner for your family. These memories, emotions, and feelings are going to come up during the process which is why I often help women going through this during our coaching sessions. It is a common occurrence with divorcing and it’s important to understand all the components of selling a house during a divorce.
While some couples decide to keep the house, others choose to sell it and divide the proceeds. If you're considering selling a house during a divorce, there are several tax and legal implications you need to be aware of. In this blog, we'll explore some of the key issues you should consider before putting your house on the market.
Understand the tax implications
Selling a house during a divorce can have significant tax implications, particularly if the home has appreciated in value since you purchased it. The IRS allows married couples to exclude up to $500,000 in capital gains when they sell their primary residence, as long as they have lived in the house for at least two of the last five years. However, if you sell the house after the divorce is final, each spouse will only be able to exclude up to $250,000 in capital gains.
Decide who will be responsible for the mortgage
If you and your spouse have a joint mortgage on the house, you will need to decide who will be responsible for making the payments until the house is sold. Even if one spouse moves out of the home, they may still be responsible for making mortgage payments until the house is sold or the mortgage is refinanced in the other spouse's name.
Determine how the proceeds will be divided
Once the house is sold, you'll need to determine how the proceeds will be divided between you and your spouse. In some cases, the court will order a specific division of the proceeds. In others, the spouses will need to negotiate a fair division of the money.
Understand any legal implications
Selling a house during a divorce can also have legal implications. For example, if one spouse is awarded the house in the divorce settlement, they may need to buy out the other spouse's share of the equity in the home. Additionally, if the home is in both spouses' names, both parties will need to sign off on the sale.
Work with an experienced divorce attorney
Navigating the sale of a house during a divorce can be challenging, particularly when it comes to understanding the tax and legal implications. That's why it's essential to work with an experienced divorce attorney who can guide you through the process and ensure that your interests are protected.
Selling a house during a divorce can be a complicated process. However, by understanding the tax and legal implications and working with a qualified attorney, you can ensure that the sale goes smoothly and that you receive a fair share of the proceeds.
The wonderful thing about memories is that they can be created anywhere. You don’t have to be in the same house to create new family traditions, memories, and more. You are strong and will get through this.
I wish you the best during this hard time, and I want you to know that I am here to support you every step of the way. I've been in your shoes before and I know what it's like to feel like you don't have the support system you once did.
This is why I was propelled into this role of a Divorce Coach so that I could help other women who were in the same situation as I was. I want women to feel like they always have an ally during their divorce no matter what.
I hope to see you on my calendar for a call soon!
Nanette
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