Attorneys Explain Your Options for
Dividing Your Home in a Divorce
One of the most difficult aspects of getting divorced is deciding what to do with the house you have shared during your marriage. Your home likely gives rise to many memories and the thought of leaving it evokes strong emotions.
But deciding how to divide the value of your home, or who gets to keep it, becomes a very complicated process. And the decisions you make now regarding diving your home will have financial ramifications for years to come.
Things to Consider When Dividing a Home in a Divorce
If you have children living at home when you divorce, a major consideration in dividing your home would be whether or not to uproot them from their familiar surroundings. This may conflict with your own need to make a fresh start in a new home. And then, there are financial considerations. If you and your ex owned a home during the marriage, the equity in it may be one of your most valuable assets.
Emotions and memories aside, there are essentially three options available to you in terms of dealing with your home from a financial standpoint.
#1. Selling the Home and Dividing the Proceeds
Probably the easiest and cleanest way to divide your home is to sell it and divide any accumulated equity. If you choose this route, it is important to get the advice of an attorney as well as a tax professional, as there may be capital gains taxes to consider.
You will also need to consider if your credit and finances are stable enough for you to either rent or purchase a new home on your own.
#2. One Spouse Buys Out the Other Spouse
If one of you wants to remain in your home, buying out the other spouse is an option. You would need to determine the current market value of the house, and come to an agreement on the buyout price. Be sure to take into consideration any adjustment for future selling expenses and future capital gains when deciding on a fair buyout amount.
Some ex-spouses who decide on a buyout remove one name from the deed, but both parties remain on the mortgage. This is a bit risky, because both of your credit scores can be affected if the spouse remaining in the home misses any mortgage payments.
It may be a better idea to refinance the mortgage, if the spouse keeping the home has the ability to do so. In that way, the spouse remaining in the home is completely responsible for the mortgage, and the other spouse is relieved from any financial obligations associated with the home.
#3. Maintaining Joint Ownership of the Home
One reason to maintain joint ownership of your home would be if you have children, and you both determine it is best for them to stay in the home until they reach a certain age. Some things you would need to consider are how to split household expenses, mortgage payments, home improvements, and maintenance and repair costs. These items can increase the cost basis of the home, and therefore, should be considered carefully.
Generally, the spouse who lives in the home would accept responsibility for taxes, utilities, minor repairs and insurance. You will need to decide what makes the most sense in terms of your financial situation, and then come to an agreement with your spouse.
Divorce Attorneys Can Help Protect Your Rights Dividing a House
Determining what is the best option for you and your family, either from an emotional or financial standpoint, is something that you and you alone can best decide – with input regarding your legal rights provided by a Michigan divorce attorney.
Whether you and your spouse decide to sell your home now or at some point in the future, there is a lot to consider. While you will no doubt want to put the needs of your family first, it is extremely important that you make wise and informed financial decisions. For this reason it is essential to consult with an experienced Michigan divorce attorney.
Whether you decide to sell, buy out your spouse, or maintain joint ownership, Michigan divorce attorney Starla Zehr can help you understand all of factors involved in dividing your home in a divorce. If necessary, she can also refer you to tax or financial advisors. And once you are armed with all the information you need, she can help you negotiate a fair and workable settlement with your spouse.