Divorce Your House or Your Spouse?

A Checklist for Your Joint Property Decisions

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Among the biggest decisions you’ll face when your marriage is dissolving is what to do about your joint property.   As you are preparing for the new chapter in your life, you should gather the facts to make an informed decision.  First, find out and track all of the financial considerations:

Checklist

  1. Calculate the carrying costs of your home (mortgage, home equity line, taxes, ins., maintenance.)
  2. Estimate or appraise the total value of the property including improvements.
  3. How much equity is in the property?  Is it underwater?
  4. What contributions from separate property did each partner make prior to or during the marriage?
  5. If you sell, what are the possible costs of maintenance repairs and upgrades?  Can you afford to do these things to prepare for a sale?
  6. What taxes will be due upon sale?  How long have the parties held the property?  Is a party over 55, giving him/her tax advantages on sale?

Once you have the financial facts in front of you, think about lifestyle questions.  If you have children and you don’t need to sell for financial reasons, does it make sense to sell?  Do you like the school district in which you are living?  What will the effect be on school age children?  Will you be able to move to a school district with good public schools?   

Think Outside the Box

What if the house has little or no equity? Cooperating with your partner will help you think creatively about potential options.  You and your spouse might decide to co-own the house for a period of time, or agree that one party will sell it in a certain number of years after the market recovers, or children graduate from school.  Maybe a short-sale is the only way to rid both parties of the debt associated with the house.  Tax considerations from sale should always be considered.  The point is to think outside of the box to solve what can seem an insurmountable problem.    

Before making any decisions, take time to educate yourself on your options by seeking advice from experts such as accountants, divorce attorneys, real estate professionals, or debt consolidation experts.  Divorce can be an emotional event so take your time to process the information and make a reasoned decision.  A house is not a home and the most important personal factor is the security, health and happiness of an individual or a parent leading a family. 

More Resources

Thanks to Romy Taubman of Marin’s family law firm, Greene Jordan and Taubman for her expert input into this article.