Breaking Up With a House: What to Do With Your Home During Divorce

Divorce is never easy as emotions run high, especially when there are kids involved or valuable assets to divide. Among the most complicated parts of the process? Figuring out what to do with the house. Whether it’s a cozy family home filled with memories or a shared investment property, deciding its fate can be one of the biggest hurdles in a divorce settlement.

If parting ways is the only way forward, it’s crucial to approach things thoughtfully. One of the most important steps is creating a comprehensive divorce settlement agreement that addresses key points like property division, alimony, child custody, and more. Let’s dive into your options for handling a shared house and what you need to consider before making any decisions.

Your Options for Handling a Shared Home

1. Sell the House and Split the Proceeds

This is often the simplest and cleanest option. If neither of you wants to keep the home or you can’t agree on who should stay, selling the property and dividing the proceeds fairly can be the best way to move forward. Once the home is sold, you both start fresh with your share of the equity.

Working with a direct home buyer or real estate investor can also speed up the process. You may get a fair cash offer and close the deal faster than going the traditional route. Plus, it helps you avoid the back-and-forth of open houses and negotiations.

Also read: 3 Mistakes You Shouldn’t Make When Selling a House

2. One Buys Out the Other

If one of you is emotionally attached to the home, maybe because it’s where the kids grew up, a buyout might be a better fit. This involves one spouse purchasing the other’s share based on the home’s current market value.

Once the transaction is complete, make sure the departing partner’s name is removed from the title and the mortgage, if possible. This protects both parties financially and legally.

3. Keep the Home for Now

In some cases, couples choose to hold on to the house temporarily. Maybe the real estate market isn’t great, or you want to wait until the kids finish school before selling. You can agree to co-own the home for a specific period and either sell it later or rent it out and split the income.

This can be a practical option but make sure expectations are clearly outlined in your divorce agreement to avoid future conflicts.

Key Considerations When Making the Decision

The Kids Come First

If you have children, think about their stability. Uprooting them during an already stressful time can take a toll. If possible, keeping them in the family home at least temporarily can help maintain a sense of normalcy. However, if the house is too expensive or no longer makes financial sense, downsizing might be the better option.

Know the Market Value

Before making any decisions, get a professional appraisal. Whether you’re selling, buying out, or co-owning, you need to understand the property’s fair market value to make informed choices. This ensures a fair division of assets and prevents future disputes.

Factor in the Hidden Costs

Selling a home comes with expenses such as agent fees, closing costs, and potential repairs. These can eat into the profits you and your ex-spouse will divide. That’s why some people opt for direct home buyers, who often cover closing costs and don’t charge commission fees. You can find reputable ones in real estate guest post submission sites.

Understand Property Laws in Your State

Property division laws vary by state. In some areas, assets acquired during marriage are split 50/50, while in others, courts divide property based on what’s fair, not necessarily equal. If one of you owned the house before marriage, it may be considered separate property. It’s crucial to understand these legal nuances before deciding what to do with the home.

Don’t Forget the Taxes

Selling a home can have tax implications. Married couples can usually exclude up to $500,000 in capital gains, while single filers can exclude up to $250,000. Depending on your situation, you might want to sell the house before finalizing the divorce to take advantage of this larger exemption.

Final Thoughts

Dividing a home during divorce isn’t just about money, it’s also about emotions, family, and fresh starts. Take time to explore your options, understand the legal and financial impacts, and always consider what’s best for your family’s future. With the right approach and guidance, you can move forward with clarity and peace of mind.