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Sell Your Home BEFORE the Divorce is Final?
Friday, September 20, 2013
This is the first of a two part series on how to decide what to do with your family home when you are going through a divorce. The home that you purchased together when you got married is likely to be the most valuable asset that you could split when sold. Or your mortgage will likely be the largest debt that a divorcing couple needs to deal with how to handle. Selling your home can be an emotionally taxing experience, add going through the divorce, a still somewhat weak economy/real estate market and an already stressful process can become overwhelming for both parties.
Should you sell your house BEFORE your divorce is final?
Selling your home ata profit before your divorce is final and splitting the proceeds accordingly sounds like a win-win scenario and possibly can be. However you will also need to consider how you and your soon to be ex-spouse plan to handle filing your taxes at the end of the year. The exclusion for Capital Gains tax is $250,000 per individual, if you file separately. However its $500,000 if you file your tax return jointly.
Selling your home at a loss. A lot of times when discussing real estate or selling your home you will hear the phrases “negative equity”, being “upside-down or underwater” on your mortgage, and “short sale”. If the home value comes in at less than what you owe on the mortgage, you have negative equity, and your mortgage is upside down or underwater.
If you sell the home at a price lower than the balance of your mortgage. You and your spouse will share the debt (rather than split an asset). The lender can also come after one or both parties to satisfy the balance owed on your mortgage.
In some cases an attorney may be able to convince your mortgage lender to approve a short sale on the home. The sale price will be lower than the mortgage balance, there will be no equity to split. BUT, your mortgage lender may possibly agree not to come after you or your spouse for the remaining balance owed. A we buy houses company may be interested in purchasing your home fast at the price that your lender has approved for the short sale.
It is important for both parties that you avoid going into foreclosure with your lender. When considering that you both are moving on to new, separate lives the financial ramifications of a foreclosure can make that process very difficult. You may want to consider working with a we buy houses company to help get your home sold fast and avoid the stress of selling your home while going through your divorce.