Following divorce, there are a lot of considerations to make with the family home. Who gets to keep it? What’s the easiest way to get one spouse’s name off of the mortgage so they won’t be held liable for the home in the future? Where will the departing spouse live afterward?
You have options, but some are easier than others. Here are three possible ways to deal with property division on the marital home:
- Often, the simplest way to split the home is for both parties to wash their hands of it entirely. Selling the home and splitting the money gives both parties equal (or at least, equitable) footing with which to begin their new lives. Additionally, this means that you will no longer have your name on a document with your ex-spouse. However, realize that there are some complications you might have to endure when selling the home. The economy can have a huge effect on whether selling the home is a worthwhile endeavor; if the housing market is down, it may make more sense to rent the property out instead. If the market is up, there are tax implications to consider for capital gains that are affected by your filing status (married couples get a bigger tax exclusion, so it might make sense to sell before the divorce).
- For couples that decide not to sell, it may be prudent for one party to buy out their half of the home. This is a good way to keep the home in the family (for the benefit of children, for example, or for sentimental purposes) but it may not always be financially feasible. Both parties in this situation should seek appraisals on the home – it’s always best to have a second opinion before committing to something so important. If the departing party cannot afford at the time of divorce to buyout his or her half, then the couple can consider a delayed buyout, but there are some long-term headaches associated with this method (keeping both names on the mortgage post-divorce, namely) so it’s not usually recommended due to potential financial and credit ramifications.
- There’s always cohabitation if you and your ex-spouse split amicably. On one hand, it could be a good idea for both parents to be around for the kids; on the other hand, you just got divorced from the person who is now your housemate, with all the potential baggage this situation brings up.