Navigating Difficult Home Sales

Selling a House After Divorce Agreement

No matter how amicable, divorces can be stressful. It’s the end of a relationship, and you must make some very difficult decisions. Throw in co-parenting children and dividing assets, and it’s even more emotionally and physically draining.

Written by: Kristin Lesko
Posted: 12/27/2022

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No matter how amicable, divorces can be stressful. It’s the end of a relationship, and you must make some very difficult decisions. Throw in co-parenting children and dividing assets, and it’s even more emotionally and physically draining.

Read more: Selling a House After Divorce Agreement

An important decision that needs to be made during the divorce process is deciding how you want to manage the sale of the house. There are a number of ways that the sale of a house can be handled after a divorce agreement.

What are your rights to the sale of the house? Do you have to sell the house at all? Should you sell before or after the divorce agreement has been settled? We’ll go over these important questions regarding selling a house after a divorce agreement.

Marital property laws

First, it’s important to understand your rights regarding the house during a divorce. Some states are community property states, meaning that everything acquired during the marriage is considered property of both spouses. In equitable distribution states, which is the majority, assets may be divided by a judge.

However, there are exceptions, even in equitable distribution states. For example, in Florida, the division of property may be unevenly drawn in cases of marital fault if one spouse earns more than the other, age differences, and other factors. In Georgia, courts will take into account each party’s finances, their behavior during divorce proceedings, the needs of each spouse, and more. For those residing in Alabama, marital property is also typically jointly owned and split — unless it’s decided that an unequal property split is, in fact, fair, depending on the aspects of your unique case.

In the case that the couple signed a pre-nuptial agreement, the division will be dictated by the agreement.

It’s best to talk to a divorce attorney to understand your rights and what can impact the amount you will receive from the sale of your house.

Marital vs. separate property

When dividing assets during a divorce, not everything is divided equally because not all property is treated the same.

Marital property is considered property that is jointly owned by the couple, including the house they purchased together. Separate property is considered to only belong to one spouse. Examples include an inheritance, gifts, and assets someone had before they were married. However, even these labels can become murky with items, which is why courts step in.

Sell before or after the divorce?

Each divorce is different, and the housing market varies throughout the year.

There are pros and cons to selling a house before or after a divorce agreement.

Selling a house prior to divorce has the benefit of providing you with money to start your new life as a single person. However, if your house takes a while to sell, this can delay divorce proceedings. Also, divorces are stressful enough, and if the two of you are not getting along, selling a house prior to the divorce agreement can cause more chaos.

When selling a house after a divorce agreement, each party has clear expectations, and the house can’t be used as a bargaining chip in the divorce.

However, you’ll still have ties to your ex-spouse when waiting to sell the house.

Capital gains tax

A major factor when deciding when to sell a house during a divorce is the capital gains tax. When you’re still legally married and file a joint return, you’re entitled to each exclude the first $250,000 of the sale of the house from taxable income for a total of $500,000.

The capital gains tax only applies to your primary residence. The vacation home you both own and only visited a few months out of the year doesn’t count. The minimum requirement for time spent living in the house is two of the last five years.

With that said, selling the house while a couple is still legally married can be a huge incentive to take advantage of the capital gains tax.

Different ways to divide a home

Just like each divorce is unique, how you want to split a property is also dependent on the needs of each person in the divorce.

Here are ways that couples may decide to go about selling their house:

  • Dividing the sale: For some, selling the house is an ideal way to start their new life fresh. Whether you sell it before or after a divorce agreement, the former couple shares the money made from the sale of the house. Some couples may agree to an uneven dispersion of the money depending on the situation.
  • Buyout: It may be more convenient for one party to remain in the house while the other moves out. For example, one spouse and the children may want to continue living in the house and not worry about buying a new property and moving. In this case, the ex-spouse moving out can sell their share of the house ownership or mortgage to the other. With the buyout, the person remaining in the house can refinance as the sole owner.
  • Co-owning: Yes, it’s possible for ex-spouses to continue owning the house together. It might not be the best market for selling a house, a buyout might not be financially viable, the former couple may want to turn it into an investment property, or the family may find it to be the best to co-own the house. If the two are amicable and can agree on the terms of co-ownership, this can be an ideal scenario.

Look into selling your house to a third-party buyer

If selling a house in the middle of a divorce feels like a stressor that is too much to bear, there are third-party buyers like Meridian Trust who can take the hassle out of the process.

Meridian Trust can purchase the property regardless of its condition, size, or even if the property is in foreclosure. We’ll pay for the inspection, too. With years of experience in multiple states, Meridian Trust has the knowledge and skill to purchase properties in all kinds of conditions and situations.

To find out how much your property is worth or to learn more, call Meridian Trust at (954) 807-9087.

Note: This guide is for informational purposes only. Meridian Trust does not make any guarantees about the sufficiency of the content in or linked to from this blog post or that it is compliant with current law. The content within this blog post is not a substitute for legal advice or legal services. You should not rely on this information for any purpose without consulting a licensed lawyer in your area.

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