The family home is often the most valuable asset divorcing couples share. As you divide marital assets, you will have to decide whether:
(A) you and your spouse want to sell the house and split the proceeds
(B) one spouse wants to buy the other spouse’s share and continue to live in the home or sell it in the future, or
(C) you and your spouse will continue to own the house jointly for a defined period of time
Selling the Family Home and Splitting the Profit in an Illinois Divorce
If you and your spouse decide to sell the home and split the profit, you will have to make arrangements to share expenses to get the house ready for market, work together to hire a real-estate agent, and make any other arrangements, financial or otherwise, to sell the home. The advantages of selling the home outright include sharing the cost of the sale and tax liability with your spouse not to mention getting a fresh start. If your house’s value has increased substantially over the years, capital gains can be offset by $500K as a couple compared to $250K as a single owner. Disadvantages to consider may include whether the proceeds from selling the home will allow you to afford to buy another house and if you will be able to qualify for financing on your own.
Buying Your Spouse’s Share in the Family Home in an Illinois Divorce
If you are considering buying out your spouse so that you can remain in the family home, perhaps for the sake of the children, again, you will have to consider whether you can qualify for refinancing. Divorcing homeowners mistakenly assume that it is just a matter of transferring the title and taking a former spouse’s name off the mortgage if they are awarded the home in a divorce. However a divorce decree does not nullify a mortgage contract, therefore you will typically need to refinance the mortgage to become the sole borrower. Also keep in mind that if you and your spouse have quite a bit of equity in your home, your spouse is entitled to half. You will either have to pay him or her a lump sum, trade other marital assets comparable to what is owed, or finance additional funds to pay your spouse their half of the equity.
Continuing Joint Ownership of the Family Home After a Divorce
While some divorcing couples may decide to let it ride, remaining co-signors to the mortgage, this may make it difficult for the spouse who is exiting to qualify for financing on a home of their own, not to mention their continued responsibility for payments, maintenance, and taxes for a home they no longer reside in. Spouses may decide to go this route hoping to provide stability for children in the short term when refinancing is not possible, but certainly couples should iron out what the long term plan is when the kids eventually gain independence. Does one spouse intend to buy out the other in a few years or will you both sell the home? Who will pay for maintenance and taxes when only one spouse is enjoying the home? Can you count on your ex spouse to provide the necessary upkeep so the house doesn’t decrease in value? Deciding to continue owning the house jointly after a divorce requires thoughtful consideration to ensure you and your soon-to-be ex are on the same page.
Contact an Experienced Property Division Lawyer Today
Often times it is difficult to qualify for a loan after a divorce because of the new financial realities of being single. Your loan may not be approved when considering your debt to income ratio, your salary, or a stormy credit history even though you want to keep the house. On the other hand, you and your spouse may not want to co-own the house indefinitely, preferring to make more concrete arrangements now. For more information on what to do with the house in a divorce and how to purchase a house from a spouse, our post on how to purchase the house from a spouse in a divorce outlines options that may work in your unique situation. If you would like more information regarding marital property division in an Illinois divorce, contact the Libertyville law offices of Schlesinger & Strauss LLC for more information at 847-680-4970.
