Practical Solutions to Keeping or Selling Your House In A Divorce
Keeping or selling the marital house can be a bone of contention with divorcing couples. One may want to sell it for financial gains and the other may want to retain it and live in it because it means financial security for him or her. In order to avoid such a situation, it is best that they have solutions in place.
If one person leaves the house, then the other person will have to worry about paying out the mortgage, insurance, tax, maintenance and so much more. Also, maintaining two households is expensive. But any financial gains made from the house by one party does not mean the gains will come to an end with them moving out of the house.
Certain other solutions may help you to sell or keep the house.
Buyouts – One spouse sells the house to the other spouse. An appraiser will determine the value of the property. After deducting the mortgage amount and any related encumbrances, the equity value of the house is determined. The spouse will pay half of the equity value in cash or via exchange of other assets or spousal support, and so on.
Tax consequences – Selling the house would mean having to pay capital gains tax. But if you retain the house, over time there will be depreciation of the property. It will mean that you will have lesser tax to pay.
Court order to sell the house – Situations may arise where neither of the spouses have the ability to buyout the house. The court can be asked to grant an order that would allow the house to be sold at the end of the divorce trial. It also happens when the spouses are unable to reach an agreement.
The court can also be asked to grant an order for selling the house before the divorce trial begins. If the spouses feel that they do not have the means to pay their attorneys or that the financial settlements such as child and spousal support will be difficult to meet. They may also fear about a foreclosure (inability to pay mortgage) of the property.
Getting a stipulation and order (agreement) – Selling a house while the divorce procedure is on can be quite complicated because certain restraining orders come into effect during this period. The complication can be avoided by asking the court to sanction a written agreement signed by both the spouses.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.