Who Gets the Family Home in a Divorce?
For most married couples, the family home is usually the largest asset they own. For divorcing couples, it can become one of the most bitterly fought parts of divorce negotiations–second only to child custody. In many cases, spouses have a knee-jerk reaction, quickly deciding they want the house, without considering all the ramifications that may go along with that decision.
There are several different options that divorcing couples have regarding the marital home. The key is figuring out, with the guidance of your divorce attorney, which option will work best for you.
The first option is for one spouse to buy the other spouse’s share of the home. This can be done if the buying spouse either has enough cash to pay for the other spouse’s half, or is able to qualify for a mortgage in their own name. It is important to have the property’s value determined by a professional real estate appraiser in order to make sure both spouses are getting their fair market value share. Another major point to consider is that buying a spouse out of their share does not necessarily mean the value of the property is split in half. If the couple has other assets which will be divided–such as bank accounts, stocks portfolios, etc.–those assets can be used to offset the value of the home.
Sometimes the best choice is to sell the home outright and then split the profit with your ex-spouse. This can be especially helpful when it comes to capital gains tax for that profit as long as you meet the following criteria:
- You lived in the home for at least two of the past five years;
- You have not used the capital gains exclusion in the past two years; and
- Your profit if you are single does not exceed $250,000. If you are still legally married when you sell your home, then that profit threshold doubles to $500,000.
Another option for couples who have children is that the spouse who has primary custody of the children remains in the home until the children move out and then the house is sold and profits split. If you choose this option, and you are the one who is moving out, then you will want to make sure your divorce decree clearly spells out this agreement in order to meet IRS guidelines for those capital gain taxes.
If you are considering a divorce and have questions about property division and other real estate issues, contact an experienced Kane County divorce attorney to find out your legal options. Contact Bochte, Kuzniar & Navigato, P.C. at 630-377-7770 for a free initial case consultation.