The Legal Landscape of Selling Your Home After Divorce

Dealing with legalities is one of the hardest components of a divorce. Here’s how it looks for your property.

?

Taxes

The profit you receive from the sale of a property is regarded as a capital gain and is liable to capital gains tax. Gains from the sale of your principal residence are, nevertheless, protected from several tax laws. Married couples filing jointly may be exempt up to $500,000, while individuals may be exempt up to $250,000. If one spouse retains the house after a divorce and then sells it, they can only claim the $250,000 individual exemption, provided that all other IRS rules are satisfied. Knowing this difference is essential to estimating a spouse's possible tax obligation upon selling the home.

?

Property Classification

As this affects how the proceeds are distributed, ascertain whether the house is separate property (owned by one spouse before the marriage) or marital property (purchased after the marriage).

?

Divorce Agreement

The conditions of your divorce decree, which will describe how the house is to be sold and how the proceeds are to be allocated, are the most important component.

?

Community Property

Almost everything you have acquired throughout your marriage is owned 50/50 under a community property state, including debts, assets, and income. Property that you possessed before your marriage is one of the few exclusions. Even though your spouse might be entitled to half of the house's appreciation during the marriage—this can be complicated, so always check with an attorney—you still maintain separate ownership if you owned your home before you were married, and their name was never added to the title.

?

Buyout is One Option

In a buyout, the spouse receives half of the property's current market worth in exchange for sole ownership from the individual who wishes to maintain the house. The buyout may be more or less than half of the market value in a state with equal distribution, based on the previously listed elements of income, financial contributions, and earning potential. Although a buyout can occasionally be rolled into a home refinance, this alternative necessitates that the person conducting the buyout has access to a sizeable sum of money that isn't affected by the remaining divorce processes.

?

Call Lesa Miller at (812) 360-3863 or go online at https://lesamillerrealestate.com/ where you can read her posts on other social media accounts and websites.