Selling A House After A Divorce

A divorce can be an emotionally and financially exhausting process. One of the most critical decisions a couple must make in the event of a divorce is what to do with their marital assets, such as the marital home. Selling a house after a divorce can be a tough and complicated process. In this blog, we'll go over the most essential things to consider when selling a home after a divorce.

Need To Sell The House After A Divorce?

The marital home is often the couple's largest purchase, and its division should be handled carefully. It is crucial to begin discussing the house early in the marriage since it is always better to be prepared. 

When it comes to selling a house after finalizing a divorce, it is equally critical to contact a professional real estate agent. A real estate agent will provide an unbiased assessment of the property's value, which is important when determining how to divide the asset. They can also help to facilitate negotiations between spouses and ensure that each party receives a fair settlement.

House Options When Going Through a Divorce

When selling a house after divorce, there are several options available for the divorced couple:

Divide Large Assets

This implies dividing assets such as the car, securities, retirement benefits, collectibles, et cetera. All of these assets must be allocated in a way that both parties agree on.

Buy Out the Other Party

If one party has a profound connection to the home, they may choose to go with this option. The purchasing party can do this by refinancing the mortgage in their sole name or by leveraging other financial resources to pay off the other party's share.

Co-own a Divorce Home

Divorcing couples might also choose to co-own their home after the divorce is finalized. This alternative is viable when neither party wishes to sell the property or when selling it would be detrimental to their interests. With this agreement, both parties would continue to split mortgage payments, property taxes, and maintenance costs.

Sell the Marital Home

Selling a home after a divorce agreement is often the most straightforward and practical option. This option enables both parties to keep their share of the equity, and one can use the proceeds to buy a new home.

Pros and Con of Selling a House After a Divorce Agreement

Pros

• Great Payout: Selling a home after a divorce settlement could result in a substantial return. The transaction proceeds can be divided among the parties and used as they see fit.

• Increased Value: If you have taken care of the house and kept it in good condition, its value is likely to rise over time. This implies you'll be able to sell it for more than you paid for it.

• Favorable Market: Because the real estate market favors sellers, you are more likely to receive a decent price for your house. This is especially true if you live in a desired neighborhood.

• Expert Advice: Consultation with a professional agent is the best technique for determining your potential selling price. They can provide you with a comparative market analysis, which will show you how much comparable houses are selling for in your region.

• Tax Exclusion: If you sell while you're still married, you can defer up to $500,000 in capital gains tax. Otherwise, you are exempted from capital gains tax of up to $250,000. This is when the residence is sold to a sole proprietor. This means that if you sell while you are still married, you can save a lot of money on taxes.

Cons

• Children, Your Job etc: When selling a house in a divorce, It is important to think about how this will affect other aspects of your life. If you have children, you might want to keep them in the same school district or near their friends. Furthermore, selling your property may mean relocation to a more distant region which may affect your job.

• It May Cause Additional Problems: While selling your home may seem to be a great solution, it can cause other issues. If you don't have enough equity in your home, for example, you may end up owing money after the sale. Furthermore, if the real estate market is sluggish, you may have trouble finding a buyer or getting a fair price for your home.

Tax Implications of Selling the Marital Home

Here are some tax implications to be aware of.

Selling the Home as a Couple

If you and your spouse have both lived in the marital home for at least two of the previous five years, you may be entitled to a full exclusion of up to $250,000 per individual or $500,000 per couple when selling the marital home. This means that any earnings from the residence sale are not subject to taxation up to these limits.

Selling the Home During the Divorce

If you are divorcing and selling your home, you should wait until the sale has taken place and your taxes are filed jointly. This enables you to claim the full $250,000 tax exemption per individual or $500,000 per couple.

Selling the Home After the Divorce

If you sell your house after your divorce is official, you can still claim the entire $250,000 exclusion as long as you meet the two-year residency requirement. Consider selling before the three-year period is up to avoid capital gains taxes.

Steps To Selling a House After a Divorce Agreement

Here are the essential steps to follow when selling a house after a divorce agreement.

Picking an Agent

Selecting the right real estate agent is critical to selling your home successfully. Look for an agent who has sold properties in your area and has a proven track record of selling homes quickly and at a decent price. BidMyListing is the only platform that allows homeowners to choose from the best real estate agents in their area who will pay them upfront to sell their home. Real estate agents bid for exclusive listing rights to the property they desire to ensure as a homeowner you find a realtor willing to invest in the success of your home sale.

Settling on an Asking Price

Your real estate agent will help you determine the most appropriate listing price for your home. They will perform a Comparative Market Analysis (CMA) to compare your home's features, size, and location to those of recently sold houses in your area. They will suggest a suitable price to interest potential buyers based on their results.

Preparing to Show the House

To make your home more desirable to potential buyers, you must prepare it for showings. This might involve decluttering, thorough cleaning, and minor repairs. Your real estate agent will advise you on how to stage your house to appeal to potential buyers.

Reviewing Offers

When offers start to come in, your agent will help you review them and negotiate with prospective buyers. You should evaluate the offered price, the buyer's financing and contingencies, and the closing timeline.

Dividing Cash

Following the completion of the sale, the funds must be allocated in line with the divorce agreement. If you and your ex-spouse jointly own the residence, you must agree on how to split the earnings.

Immediately after the divorce sell house. Begin right away by finding a reputable real estate agent and discussing your options.

Find a real estate agent with BidMyListing today!