Facing a divorce is never easy. Even when both spouses agree that a divorce is the best solution, it is still difficult. There are years of history to untangle and divide in a fair fashion. Finances, property and emotions can all play a role in the planning and actual execution of the division of community property. In general, the family home is often the most valuable asset as well as possibly the largest debt if you are carrying a mortgage. Add in the emotional attachment of a lifetime of memories and it can be hard to clearly define what a house is worth.
The Tax Scenario
In the best case scenario, your home has appreciated and you will be able to sell it for more than you paid for it or more than the mortgage balance. This means that after the sale of the house and paying off the remaining mortgage, each party will be leaving with some of the proceeds of the house sale. And because it was a family home and not an investment property, neither party will likely owe any taxes on the capital gains from the sale. If you and your spouse have been filing joint tax returns, then you are eligible to exclude up to $500,000 in capital gains before owing taxes. If you file your taxes separately, you would each still be eligible to exclude up to $250,000 in capital gains tax free.
Timing of the Sale
Depending on the level of aggression or agreement surrounding the divorce, there are a few different ways to sell the house. If the divorce is amicable and time is not a factor, then selling in a conventional manner could result in the highest sale price. It might require making a few repairs or upgrades to sell for top dollar but if both owners are in agreement, then it could net the greatest profit. If the divorce is not friendly or has even gotten adversarial then the key might be a fast sale and not necessarily a sale to land the highest offer. Selling for fair market value without investing time and money on repairs and renovations might be best for everyone involved. If this is the case, a real estate investment buyer such as Phoenix Home Buyers Group would be a great solution for a fast resolution. Investment buyers regularly buy homes to renovate and resell so they are accustomed to purchasing a home as is. They also normally purchase in cash so there is no need for a bank appraisal which can delay the closing.
Appreciate the Best Case
A divorce is never pleasant but if you are fortunate enough to be able to sell the family home for a profit, you should be thankful for that assistance in your new beginning. Many couples facing a divorce are also facing years of muddled finances because they are forced to sell their home at a loss and will owe the lender even after turning over the money from the sale. Contacting a real estate professional is a good way to learn about your options and make an educated choice.