Selling The House During a Divorce- What to Know?
If you’re going through a divorce, there’s a lot on your mind. Selling your home without stress in this situation might seem impossible but read on how you can do so with some help.
For many couples, a home is their greatest asset. It also may hold sentimental value to both sides. Questions of homeownership — be it the division of assets in a sale or who gets to keep the home itself — are complicated and can get testy.
In many cases, due to financial, legal, or personal reasons, it makes the most sense to sell the house in Harford County, MD and surrounding areas. But even that comes with questions. In this article, we’ll break down everything you need to know about selling a house during a divorce, house selling options during a divorce, and more.
Why selling your Maryland house may be necessary during a divorce?
You don’t have to sell your house during a divorce, but there are a number of reasons why selling may be the better choice. Despite the stress and headaches of selling during a divorce, it may be the preferred option for a number of reasons.
1. Financial reasons
When you bought the house together, you may have had two incomes to cover the expenses. If either party can’t afford the mortgage, insurance, property taxes, and maintenance on a single income, selling the house may be the most viable option.
As mentioned before, the Home Sale Tax Exclusion says that if you are married and sell a home, you don’t have to pay capital gains taxes on up to $500,000 in profit. If you’re single, the capital gains tax exclusions drop to $250,000. To be eligible for the exclusion, you must have lived in your home as a primary residence for two of the last five years. If one person hasn’t or won’t live in the home, it may make more financial sense for both parties to sell the house before a divorce is finalized so you can write off a larger profit.
Couples can apply for this tax break whether they file a joint tax return or if they file separately, so you don’t have to still be married come tax time. There’s a major financial incentive to selling the home before getting divorced.
2. Legal reasons
In most cases, each person contributed to the purchase of the home, even if it wasn’t a 50/50 split. If you each want the house but can’t come to an agreement outside of court over who should get it, the courts will decide for you.
Court battles rarely work out just like either party would like and can lead to further animosity between the couples, complicating the divorce. Most people want to avoid a legal battle, so agreeing on a plan to sell the house and split the proceeds is often a simpler solution.
Once the family home is sold, the division of assets in the divorce should become more comfortable since you’re not trying to speculate at the future value of the house. Selling takes time and effort, but agreeing to sell and how to split the money will avoid the pain and expense of a legal battle.
3. Liability reasons
If one person insists on keeping the house, it’s important to understand the liability risks and difficulties of being a single homeowner.
One spouse may have enough income to take over the mortgage and all payments, but that also means eliminating the other spouse from liability. They’ll have to talk to the lender and refinance the house, qualifying on a single income for a house that was likely purchased with two incomes. The spouse who wants the house might have the liquid cash to buy out the other, but a lender might not agree that they’ll have the continuing income to keep up with all the increased payments.
If the lender won’t back a single owner and the other spouse refuses to continue making payments on the house, you have to sell or risk foreclosure.
Homeownership comes with significant liability risks and financial requirements. If you can’t take on those risks alone, you could lose your home or destroy your credit.
How to sell a home during (or before) a divorce
Here is when you might need a help of a professional: you can either talk to a local Harford County, MD cash buyer like Easy Outs Homes which offers quick, stress-free sale where you don't have to deal with showings, cleaning, staging or repairs. Or a local knowledgeable Realtor who will discuss all of your options and advises you on the best plan of action depending on your needs. These professionals will hold your hand from start to finish and make sure you have a smooth stress-free sale of your home.