What Should I Know About Selling My House During Divorce?

 Posted on May 17, 2020 in Property Division

When a married couple decides to divorce, one of the most pressing questions is often, “What should we do with the family home?” Some individuals decide to stay in the family home and “buy out” their soon-to-be ex-spouse. Other times, one spouse takes ownership of the home while the other spouse receives property that is roughly equal in value. For some divorcing couples, the choice that makes the most sense is to sell the home and split the profits. Selling your home while going through a separation or divorce can be very complicated both personally and legally. There are several things you should keep in mind when deciding how to handle your family home when it comes to the division of property in your Illinois divorce.

Financial Concerns Regarding the Sale of Your Home

Before proceeds from the sale of your home can be divided, you will need to pay off the mortgage as well as any second mortgage or home equity line of credit. You must also pay the brokers’ fees and any capital gains tax that applies. Tax liability may not be high on your list of concerns, but it can have major financial ramifications during the sale of a house. 

Couples may exclude up to $500,000 of the sale proceeds from their tax liability if the following conditions are met:

• The couple is married filing jointly.

• The couple has owned the home for at least two years.

• Each spouse has lived in the home for two out of the last five years.

If the divorce is finalized by the time the home is sold, the capital gains exclusion is only $250,000. Therefore, there may be a financial incentive to sell the home before finalizing the divorce. However, the option that is best for you will depend on your unique circumstances.

Showing the House

Before you start to show your home to potential buyers, you will want to make sure it is in good condition. You may need to make significant repairs to the home, apply a fresh coat of paint, replace carpets, and take other steps to ensure that the home is as enticing as possible to buyers. It may be difficult to decide where the money for these updates should come from. This is one of the many issues that your divorce lawyer can help you resolve. If a spouse is going to be living in the home during the showings, it is important that he or she keeps the house clean and clutter-free.

Dividing the Profit from the Sale

Depending on the level of cooperation and trust between you and your spouse, you may be able to negotiate an arrangement for how to divide the proceeds. This may require assistance from your respective attorneys. The collaborative divorce process or family law mediation may also help you resolve asset division concerns. If you cannot reach an agreement through any of these means, your case may go to trial. Illinois is an “equitable distribution” state when it comes to asset division during divorce. This means that courts divide marital property in a way that is equitable, or fair, based on a number of different factors.

Contact a Wheaton Property Division Attorney

If you and your spouse are ready to legally end your marriage, you probably have several questions and concerns about what to do with your family home and other aspects of how to divide marital property. The knowledgeable DuPage County divorce lawyers at The Stogsdill Law Firm, P.C. have a collective 110 years of legal experience. We are prepared to provide dependable legal guidance regarding all of your divorce concerns. Call our office today at 630-462-9500 to schedule a confidential consultation to learn more.

Sources:
https://www.ourfamilywizard.com/blog/selling-home-during-divorce-what-consider
http://www.ilga.gov/legislation/ilcs/documents/075000050K503.htm