Going through a divorce is often a difficult time emotionally, and selling the house, is, at a minimum, a discussion point. Many people report nothing feels stable during a divorce. Especially when divorce is an unexpected event, it leaves people looking for stability. Often, this takes the form of the family home. But is keeping the house really the best decision? Below are several things to consider when deciding whether selling the house is best for you.
Selling the House: Why Do You Want to Keep the House?
As stated above, home represents stability at a time where everything else feels up in the air. Also, your home has history for you and your family. Perhaps your children grew up in that home. Certainly, your home is where you spent happy days.
Notice, these reasons for keeping your home all relate to the past. Stability is appealing, but is the house truly what provides stability? Make a list of all the reasons you want to keep the house. Consider, is there some other way to achieve the same feeling. For example, perhaps your house is set back from the street, making it feel private and safe. However, living in a gated community or a secured access condominium would provide the same sense of privacy and safety. Evaluating what you look for and other ways to meet those needs results in careful consideration of maintaining ownership of the home.
Selling the House: How Long Will You Live in the House?
If you keep the house, consider how long you will keep the house. If you plan to keep the house indefinitely, that may be reason enough to keep it. Ongoing appreciation justifies the expense of refinancing the home.
However, if you live in the home a few years until the children are grown and gone, consider the cost of keeping the home. Your spouse expects you to refinance taking his or her name off the mortgage, a significant expense. Those expenses may exceed the increase in value over the short term you will be in the house. Of course, you have to balance this against what is in your children’s best interests. They may find security in the home as well.
Selling the House: Consider Owning the House Jointly With Your Ex-Spouse
If the plan is to maintain the home for the children for a short time, perhaps continuing to own the home with your ex-spouse is the solution. This avoids the cost of refinancing and will split costs of selling the home.
Be advised, this results in an ongoing relationship with your ex-spouse. You will not be making a complete fresh start until you sell the house and find your own place to live.
Consider the emotional cost. Does every room of your house remind you of the divorce? In addition, will you be able to begin a new relationship in that house?
Selling the House: Can You Afford Your Home After the Divorce?
You mortgage payment may increase after refinancing to pay-off your ex-spouse. Do not forget about costs of home upkeep. Will the roof need to be replaced? How old are the appliances? Home ownership brings unexpected, unscheduled expenses. These expenses are significant. Further, the costs may not be recouped when you sell the home. For example, if you spend $15,000 on a new roof, this will not automatically add $15,000 to the value of your home. Buyers expect a home to have a roof that does not leak. The same applies with many appliances, such as a water heater and washer / dryer.
Selling the House: What Will You Be Sacrificing to Keep the House?
If you agree to take the equity of the home as part of your property settlement, consider what you have to give up. You will be dividing your property between yourself and your soon to be ex-spouse. Can you sacrifice even more to keep the home? For example, it is tempting to sacrifice your retirement benefits because those benefits are not immediate. Consider the time you have to rebuild your retirement. Is keeping the home for a few years worth delaying your retirement? If you need to sell the home in the future anyway, are you simply delaying the inevitable?
Selling the House: What Are Potential Future Tax Consequences?
Make sure to explore any tax consequences to keeping your home. Capital gains taxes and exclusions for the sale of the home are significant. Consequently, a sale while the home is in both names is advantageous – or at least not financially painful in the future.
Selling the House: Your Realtor is Important
If you consider selling your house, work with the right realtor. This is not the time to use your soon to be ex-brother in law for the sale. Inform the realtor of your situation. The appropriate realtor has experience with divorcing couples. Communicating with both parties creates an extra step and requires patience on the part of the realtor. Further, both parties must be onboard with the sale. If one party is dragging his or her feet, selling the house will be difficult. It is easy for the party living in the home to sabotage a potential sale, by leaving a mess or making the home unavailable for showings. Both parties benefit from a quick sale for the best price.
Selling the House: The Decision
Deciding to sell the family home is extremely difficult. It is easy to say it is important to set emotion aside but it is difficult to do. The decision does not need to be made immediately. Take some time and consider your options. Work closely with your attorney. Make the decision that is best for you and your family after careful consideration and discussion with your attorney.
If You are Divorcing
If you are divorcing, whether you keep or sell the house is one of many important decisions before you. Contact the law firm of Fait & DiLima for a consultation. We practice family law exclusively, and are familiar with the many choices you have to make. Let us help you make the decisions that are best for your family. We have offices in Frederick and Rockville to serve you.