Divorces are rarely easy, and very few end with no disputes over major assets. For most relationships, the biggest shared assets are related to real estate.
Aside from its purely financial value, leaving or selling the family residence can be gut-wrenching, especially when children are in the picture. You should weigh both your legal rights and economic realities before making any decisions, while considering the needs of your children.
Sonia is both your consultant and negotiator during this challenging time, and can coordinate the many moving parts of the transaction. She will work closely with your legal team to handle the sale or refinance of the marital property with the least complications. Her foremost goal, however, is to empower you with the information you need to make the best decisions so that you can move on.
While this process is not easy, it can be greatly aided by a real estate and mortgagte expert like Sonia Alvarado that thoroughly understands the intricate details of marital real estate.
One spouse buys out the other’s share of the house.
If the other party is willing to walk away from ownership, the one who stays can simply “buy out” the other's interest in the property. This also requires the departing spouse to be removed from any deeds, mortgages, or other rights or obligations on the property.
Today, families need to balance their wants and desires against the sometimes harsh financial realities of life after divorce. Not all families are able to maintain exactly the same lifestyle they had prior to divorce.
While it would be nice to remain where you’re comfortable and avoid the hassles of moving, staying put might not be the best financial decision for you. No matter how attached you are to your home, it’s critical to have a realistic sense of whether you can afford it. If you give up everything else in order to keep the home, and then find that you can’t cover the mortgage, property taxes, and maintenance, you may end up in serious financial trouble.
Sell the house now and divide up the profits.
If the two parties to a divorce are still civil and want a clean, quick, and simple break, selling a property is a great idea. Your primary consideration under these circumstances is to maximize your home's selling price. Sonia can help you avoid the common mistakes most homeowners make which compromise this outcome.
One looming issue will be how the proceeds are divided between the spouses. A common philosophy in determining who should get how much out of a home or other property sale is to look at how much each spouse contributed to the property.
For example, if one party contributed 60 percent of the cash at the time of purchase, and later paid 40 percent toward the payments on the loan, that would be their relative contribution to the property. That can lead to a quantifiable figure that may be compared to a similar number produced by the other spouse.
When the parties figure out the relative percentage of the total value each contributed, they can divide the proceeds of the sale accordingly.
Keep the house until the children move out, then sell.
Some divorcing couples retain joint ownership for a period of time. This is common where children are involved. In this scenario, one parent may remain in the home with the children while the other one relocates. In some cases, parents have even taken turns living in the home on certain days of the week, so the children do not have to pack up and change homes every few days.
Typically, after the children reach a certain age, the couple sells the home and splits the profit. If you're the one who moved out and you haven't lived in the house in two of the past five years, you may or may not owe taxes on the profit from the home sale. If your divorce or separation agreement outlines your future plans to sell the house, the IRS may consider that as meeting the two-out-of-five year residence rule. Please consult with your CPA.
Keep your eye on tax considerations which may change from the time of your divorce to the time of the ultimate sale. Also, it is a possibility that your spouse can decrease the value of the home by failing to maintain it, or become delinquent on paying property taxes, not pay contractors who work on the home and therefore suffer liens against the property, or even loose it to foreclosure.