You've owned your home for five years, and now you and your spouse are getting divorced. You think it's worth more than you paid for it, but it's not an asset that you control outright. What can you do with it? There are three basic options, assuming you don't want to go on jointly owning the home even after the divorce -- something that can be problematic if your spouse stops making the payments, as you'd still be liable.
These options are:
- Sell the house. Right away, divide the profit between the two of you. This is the most common option that people chose. Both partners can then go on and buy their own homes, perhaps using the profit along the way.
- Sell the house. Divide the profits at a later date. This is less common, but divorce can take a while and you may have your reasons to put off the division.
- One spouse keeps the house. If your spouse wants it, for instance, he or she just buys out your interest and then refinances the house alone. People often chose this if they're attached to the home for sentimental reasons.
There is no right or wrong answer here. It all depends on your situation. If your ex can afford the home and wants to keep it, letting him or her buy you out gives you the cash you expected anyway -- and perhaps more -- and saves you the trouble of finding an outside buyer. If you both want a fresh start, selling the home isn't complicated and gives you both a nice financial boost as long as you make money during the sale. Just be sure you know all of the options you have as you work through the process.
Source: FindLaw, "Divorce, Taxes, and Your Estate Plan," accessed Jan. 17, 2018