Are you considering a divorce or have been served divorce papers?
Are you trying to figure out what to do with your house?
Should you keep your house or sell your house during the divorce?
Let’s dig in.
Selling House During Divorce
Choosing to Sell the House During the Divorce
There are benefits to selling a house during the divorce process. It might be painful during the process of selling, but it’s better long term in some aspects. Financially, you both will have more money to start over with. You can apply these profits to pay off debts that you have accumulated together. Eliminating your dual-income mortgage and debts can build a solid foundation to start life anew with. Sometimes, couples chose to sell because the house is unaffordable without a dual income. Going ahead and selling the marital home will provide legal and personal closure.
Preparing to Sell the House
If you decide to sell your house during the divorce, there are some things that you need to consider to get prepared.
Most homes need some repairs and maintenance performed before they are ready to sell. You should sit down with your soon-to-be-ex and figure out who will:
- choose the Realtor
- pay for repairs and maintenance
- do the repairs and maintenance
- pick the contractors
- pay the contractors
- take off work to meet with contractors
- accept the offers from buyers
- negotiate with the buyers
- get what percentages from the sale of the house
If you cannot come to an agreement between the two of you, you will need to involve the divorce attorneys. To save some money on attorney fees, go ahead and individually write down what you would like to happen with all of these scenarios. Bring these lists to your attorneys and let them negotiate with each other and then get back with you.
Dividing the Profits From the Sale
Georgia is an “equitable distribution state.” This means that all marital property acquired during the marriage is subject to division.
Property brought into the marriage is not subject to division in a divorce. In order to divide up property in a divorce action, categories of property have been established. Marital property includes all property that was acquired during the marriage, regardless of how it is titled (in whose name it is).
Selling House Divorce Agreement
We shouldn’t have to mention this, but we need to. If you are going through a divorce and are trying to sell your house – consult an attorney.
With that being said, let’s move on.
When selling your house during a divorce, your divorce agreement needs to include the terms of the house sale. When there is a divorce agreement that lays out the terms of selling the house, this becomes a court order. Having your attorneys agree upon fair distributions of sale proceeds and submitting it to the judge is the cleanest route to take when selling a house during a divorce.
Let’s cover some things that your divorce agreement should include:
- Target purchase price
- Profit split between both parties
- The Realtor that will be used
- Who pays the Realtor fees and commissions
- Who will make the repairs
- Who will pay for the repairs
- Who is responsible for maintaining the cleanliness of the property
- Who will store possessions into storage
Even if you verbally agree to these items with your spouse, you should definitely put them down in writing. This way, if there’s a $10,000 expense after the sale of the property, there is no dispute of who owes that money.
Selling a House After Divorce Agreement
Whether you sell the house before or after divorce, your divorce agreement needs to include the terms of the house sale. This is especially true when you are selling your house after the divorce. When there is a divorce agreement that lays out the terms of selling the house, this becomes a court order. Having your attorneys agree upon fair distributions of sale proceeds and submitting it to the judge is the cleanest route to take when selling a house during a divorce.
Related: Divorce Process In Georgia
Sell House Before or After Divorce
Whether you sell the house before or after divorce, the process of selling your house can be messy. You can sell the house during the divorce, which allows you to split the profits (and expenses) with your spouse. Or, you can sell the house after the divorce and the profits will go to the spouse that got to keep the house.
Selling the House Before Divorce
Selling your house before divorce provides several benefits.
You will have a higher tax write off if you sell while married.
For married couples, profits up to $500,000 from the sale of a home are not taxed as capital gains. For a single person (selling after getting a divorce), profits up to only $250,000 are not taxed. Note that you must have lived in the property for two years to take advantage of this tax benefit.
You will not have to figure out equivalent equity exchanges.
In all honesty, the value of a house is just a perception. You can have 7 appraisers appraise the value of your home and their estimates will vary within tens of thousands of dollars. What happens if your spouse sells the house after divorce and they get an extra $40,000 from the sale? What happens if you sell the house after divorce and you end up losing $30,000? It’s a lot cleaner to just sell the house before the divorce and split the profits equally.
You will get to just be done.
You should sell the house during the divorce process and lay out the terms of selling the house in a divorce agreement. This way, you don’t have a lingering house to sell with your ex-husband or ex-wife, which could be a nightmare. Selling the house prior to getting a divorce allows you to just be done with the whole ordeal so that you can move on with your life.
Selling the House After Divorce
Selling your house after divorce provides several benefits.
Holding rental properties can make good investments.
When you hold onto your property after your divorce and you both decide to rent it out, you can generate cash flow from the property and build equity. There are two caveats to this though. You will be a business partner with your ex-spouse. You also won’t generate much cash flow. Let’s assume the property cash flows $300 per month. When you split it down the middle, you’re only getting $150 each. You both have to ask yourself if it’s worth your headache, money, and time to hold onto the property for the long haul.
You’ll have one less thing to worry about.
When you are filing for divorce and selling your house, there’s a whirlwind of junk that you have to deal with. Selling the house after divorce would alleviate you from having to deal with making repairs, cleaning, listing, showing, and selling your house. However, this doesn’t solve your problems if you and your ex cannot easily agree on things when it comes to selling the house after the divorce. Be sure that you aren’t just adding months, or years, or tension and arguments to your life. If you think that selling the house after the divorce will cause problems, go ahead and sell the house during the divorce process.
You’ll have a place to live in.
This one is a 50/50 shot and assuming that you will get to be the one that gets to live in the house post-divorce. If this is the case, then getting to keep the house will keep you from having to uproot from your home, find a new place to live and move all of your belongings. The flip side to this is that you are going to be in a house that could potentially be a constant reminder of your ex and the marriage.
Co-Owning A House After Divorce
Divorcing parents may opt for co-owning a house after divorce. Sometimes parents wish to continue raising their children in their home instead of uprooting them. Couples need to work out an arrangement wherein the live-in parent pays for the mortgage, taxes, insurance, and utilities. Any repairs or upgrades needed to improve the property for a resale should be divided equally as both parties will profit.
Frequently Asked Questions When Selling House During Divorce
Is it better to sell a home before or after a divorce?
Co-owning a house after divorce presents its own set of problems. This is especially true when exes want nothing to do with each other. The easier route, in the long run, is to sell your house during the divorce process so that you can simply divide the money and move on.
Should you sell the house in a divorce?
Selling your house in a divorce will simplify things. You have greater tax benefits, meaning you put more money in your pocket if you sell your house during the divorce. It’s also easier to just split the profits from the sale of the house instead of trying to figure out which equivalent assets to trade each other.
What happens to the house during a divorce?
The divorce courts will not divide the profits from the sale of a home 50/50 if they follow the Equitable Distribution Law. This law states that the assets are divided equitably based on the income and debts owed by each spouse at the time of the divorce. This means that the profits will be ‘fairly divided.’
Can a judge make you sell your house in a divorce?
A judge making you sell your house is not terrible. This just means that you and your spouse must submit a divorce agreement to the judge explaining who pays for repairs, Realtor fees, cleaning, etc. You and your spouse must pick a Realtor or the judge will find one for you.
Selling House During Divorce To An Investor
Selling to an investor has its upsides.
- No showings or open houses
- No debating with your spouse on who pays for repairs (we buy as-is)
- No debating on who is paying Realtor fees (we have no fees)
- You don’t have a bunch of strangers in your business
- You don’t have to clean out the property
- You close when you want (heck – you can even close on the day of the divorce)
You’re dealing with enough crap right now.
Do you really need a Realtor coming into your house telling you about all of the junk you need to fix and clean?
Do you really need to sporadically get a call from your Realtor telling you that you have a showing in 2 hours, forcing you to take off work early and lose the income that you really can’t spare right now?
Do you need groups of people just walking in your house and asking questions about the divorce?
Skip all of the crap.
If you’d like to keep things simple, private, and on your terms, fill out the form below.