You might love your family home. Yet that does not necessarily mean you should try to keep it when you divorce.
Here are some reasons you should consider selling it:
You get an accurate valuation
California law requires you to split your community property equally unless you agree otherwise. It covers almost everything you acquired during your marriage, with a few exceptions, such as inheritances and gifts made to one person.
You cannot split a physical item such as your home in two. You can only include it in the total value of assets you have and need to split. If, however, you sell your home, you have a definite amount of money to split. If you do not, you have only an approximate figure that could lead to disagreements if the value changes considerably during or after the divorce.
If one person buys out the other person’s interest in the home during divorce, when the owner spouse does sell it in the future, he/she will be responsible for all the capital gains associated with the sale going back to the original basis plus improvements and he/she will only get the current $250,000 exclusion for taxes at the future sale as opposed to the $500,000 exclusion if you sell it as part of the divorce. Always check with an expert to understand the ramifications.
You remove yourself from old associations
Houses are full of memories, some good and some bad. Even if you can cope with living amongst those memories, any future partner you get might struggle.
You save yourself time or money
Do you want to spend your days dusting a five-bedroom house when you are the only one living there? Heating and lighting an empty house will also cost much more than one more tailored to your new situation. The mortgage is another factor to consider. It can stretch the income when two people are working, let alone when it is just you paying it.
Plus, if you keep your home and decide to buy out your spouse’s share, that may mean dipping into your savings, retirement funds and other assets, which could leave you less financially secure when you’re done.
Selling the house during or after a divorce is not right for everyone. Getting help to understand the pros and cons of all property division options is essential to making the correct decision for your needs.
