Should We Sell Our Home Before or After Our Divorce?
If you are considering divorce and you and your spouse own a home together, you’ll need to make some decisions about what to do with the property when you are no longer living together. Often, this means selling the home. New York is an equitable distribution state, meaning that a court will make every attempt to ensure that property is divided between you and your ex-spouse as fairly as possible — which may not always mean equally. If selling your home is on the table, you need to know whether it’s better to sell the home before your divorce is finalized, or after. Here’s what you should know.
Selling Your Home Prior to Your Divorce
You and your spouse can agree to sell your home before your divorce is finalized. Typically, this means that you will split the proceeds from the sale down the middle, unless one party invested non-marital assets into the home. For example, if your spouse used part or all of an inheritance to purchase the home, they may receive their share of the proceeds, plus any non-marital funds that were used to purchase the home.
Benefits of selling your home before your divorce is finalized include but are not limited to:
- Higher tax write offs. If you sell the house prior to your divorce, you may be eligible to exclude up to $500,000 in capital gains on the next year’s taxes, compared to only $250,000 if you sell after.
- Negating the need to find an equivalent exchange. If one party wants to keep the house, they will need to find an equivalent exchange. There may not be enough value in other properties to consider its exchange for a home to be equitable. However, if you sell the house, no equitable exchange is needed, because the proceeds from the sale are simply split between both parties.
- The emotional relief of being able to move on. If your marital home is a source of emotional strain for you, selling it may be the best option. You’ll receive a sum of money that you can use as a down payment on another home or to rent an apartment or condo if you wish. You won’t be stuck living in a home that continues to cause heartbreak.
Who Gets the House in the Divorce?
If you decide not to sell your home before the divorce, likely one of you will be awarded the home in the divorce settlement. You and your ex-spouse may reach an agreement on who gets the home in exchange for what, or a Long Island divorce judge may make the decision for you if your divorce becomes contested.
Selling Your Home After Divorce
If you were the party that received the home after the divorce was finalized, there are a few benefits you can still incur. Consider these before making a final decision on whether to sell the home before or after dissolving your marriage.
- Increased property value. The value of property generally increases over time, and if you’ve done any maintenance or renovations, this can make your home worth much more than it was originally before the divorce. You’ll likely to be able to sell it for a higher amount in this case than if you had sold it as-is prior to the divorce.
- Reduced real estate stress. Selling a home and going through a divorce simultaneously can be difficult. If you and your ex-spouse are able to easily find an equivalent or equitable exchange for the home, going through the real estate process is one less thing to worry about.
- A place to live. If you don’t have much left after the divorce, you’ll have someplace to live while you work on getting back on your feet and learn how to live independently.
When to Contact an Experienced Divorce Lawyer
Property division in a Long Island divorce can be complicated, especially in high net worth or contested divorces. Contact Hornberger Verbitsky, P.C. to learn more about equitable distribution in New York and when the right time to sell your home may be. Call now for a consultation at 631-923-1910.
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