One of the most difficult parts of a divorce in California is splitting up the assets you have accumulated throughout your marriage. One of the most significant assets involved in the property division process for most couples is the family home. In addition to the financial value of the property itself, there is often emotional value given to the place where the couple built their lives together.
Dealing with real estate issues on top of everything else may be too much for divorcing couples to handle. Some people make the mistake of fighting for the house over other assets. Once the dust settles, they find themselves with an expensive house that they cannot afford to maintain. If you are considering keeping the house long-term, make sure you can afford the maintenance costs and mortgage payments. Stay-at-home parents and other spouses who did not work during the marriage may plan to rely on alimony payments to afford the property, However, when the alimony stops, they may find themselves in financial trouble.
One expert suggests waiting to make a decision regarding the house until after the divorce is finalized. In the meantime, there are multiple options. Couples with children may benefit from allowing one spouse to live in the home for the benefit of the children and waiting to sell the house until the child is of age. If you and your ex-spouse are on good terms, you may also be able to take turns living in the house and split the costs of an apartment. That way, the children can continue living in their family home and spend time with both parents. Eventually, however, one person will need to buy the other out or the couple will have to sell the home and split the proceeds.
If you and your spouse decide to, you can sell the house and split the proceeds. However, if you buy out your ex-spouse and then sell, you are likely to lose money. For example, selling and splitting the profits will allow you to avoid taxes on your joint return. However, if you buy out your ex-spouse but sell the house on your individual tax form, you could be facing thousands of dollars in taxes.
It is easy to get attached to your house, but consider what is best for your financial future before deciding what to do with it.
Source: U.S. News, “Divorcing? Should You Divorce Your Home, Too?,” Geoff Williams, Oct. 11, 2017