Selling A Home During Divorce
Divorce makes us question many things and the period of transition is psychologically and physically draining. Homes are valuable assets so it’s important to know what to expect when selling your home, especially during a divorce.
Whilst going through the stressful process of a divorce, it will help both parties if you are aware of what to expect and what you can do to ensure you both get the best deal for the home you are selling.
Divorce-related house sales are usually much more complicated than your usual sale, with a continued strain on communication between parties that can impact on how successful the home sale will be. This can influence how quickly the home is sold and whether you will get the best possible price for the home. Besides, there is the complex matter of how the share of the sale will be processed and who will own sentimental values in the home after its sold.
Many people opt to list their home on a real estate for sale website or through an agency. But to ensure this is a successful approach, you need to plan first and be prepared. Without the required preparation a bad home sale could be just around the corner that could impact negatively on both parties financially in the long term.
Most couples going through a divorce will have three options when they list their residential real estate on MLS listings or through other modes:
One partner will buy out the other legal interest, becoming the 100% homeowner
Keep their home until their children turn 18, approach couples take to avoid selling their homes right away
List home on the market via the MLS listings for sale sections, and splitting the sale amount
Legal Reasons For Selling Your Home in Divorce
Each individual may have contributed, monetarily or otherwise, to build or add improvements to the home. In many cases, this contribution is not always 50/50 which makes things much more complicated causing disagreements during the divorce and home sale.
Before escalating this process to the legal courts to decide, it is advisable to come to some type of agreement first. By mutually agreeing to the split for the sale first, you will be avoiding a very expensive and messy process by going down the legal route in court.
Despite the terms of your relationship, it is advisable to at least come to some type of an agreement first on how the home sale will be split between both sides. Homes are usually the biggest asset, holding the most value in any divorce and so it’s important that the sale and split in the proceeding is completed amicably. By mutually agreeing and communicating through the home sale process this will benefit both parties in the long term.
Determine The Best Selling Option
Deciding whether to sell or keep the home can be a difficult decision, to help you make that choice you might need to seek the expert advice of a professional real estate agent.
If you decide to keep the home yourself, you will need to assess whether it will be feasible to continue the mortgage on your single income as this might not be sustainable moving forward after the divorce.
Besides mortgage payments, you will also have to consider loan payments, interest, property taxes, insurance, and utility bills as these costs will all add up to a large amount in the process.
When calculating these costs you may actually realize that selling your home is a more feasible option than to keep the home yourself.
Capital Gains Tax
One thing to be aware of when selling your home during a divorce is the potential capital gains tax you may end up paying. Many laws state that when filing this jointly whilst married, selling a home will be tax-exempt up to $500,000 in profits. This amount cuts to half ($250,000) if you are single and selling a home so this is something to be aware of when selling.
If you are to list your home for sale, capital gains tax could be an issue if you are to obtain a high-profit margin from the real estate. If this is the case, you have the potential to be taxed extraordinarily. With capital gains tax there are a few exemptions to be aware of. When filing the tax if you have lived in the home for at least 2 years out of 5 years, you could be tax-exempt. Another exemption maybe if the home is your primary property and not a second or vacation home.
Select The Right Real Estate Agent
One of the most important parts of selling your home during a divorce is to select the right real estate agent. Due to the complex nature of the selling process, you will need a real estate with the experience and expertise in the field that can navigate through difficult negotiations.
The real estate agent you decide to go with to sell your home will need to have great communication skills and be willing to understand sensitivities when dealing with clients going through a divorce. This will include dealing with both parties fairly with no preference to either side and working in the best interest of all.
By selecting a real estate agent with this skill set, you can be assured to get the best possible price for your home whilst selling your home in a reasonable timeframe with fewer complications.
By Mark Ollerton - Freelance Writer www.markollerton.com