As a married couple, there’s a good chance your family home is one of your most valuable assets. Should you decide to divorce, it could quickly turn into a sticking point, as both individuals understand how much this piece of real estate is worth.
The first thing you should do is make sure it is truly a jointly-owned asset. For example, if you owned the home before your marriage and your name is the only one on the deed, it shouldn’t be subject to division as a result of divorce.
If you purchased the home together, you have two basic options:
- Sell the home and split the proceeds: For example, if the home is paid off and you clear $1 million from the sale, you can both walk away with $500k and call it a day. This is often the easiest and most efficient way to deal with a jointly-owned home, with the actual sale of the property the biggest challenge.
- One person stays while the other moves out: With this, the spouse who stays in the home should buy the other’s interest in the property. Sticking with the above example, if you maintain ownership of a home assessed at $1 million, you’ll forgo other assets to make up for the difference.
It’s important to consider the pros and cons of both options, as doing so allows you to make an informed decision.
For example, if you profit from the sale of the home, reinvesting into another home within two years allows you to avoid capital gains taxes, which can save you thousands of dollars.
Also, if you’re interested in buying out your ex-spouse’s interest in the property, make sure you have the financial means to maintain it in the future. For instance, you must have enough income to make any mortgage payments, along with taxes, insurance and upkeep.
As one of your most valuable assets, it’s important to pay close attention to your family home as you prepare for the divorce process. By knowing which approach you want to take, it’s easier to implement a strategy that positions you to get what you want in the end.