If one spouse wants to keep the family home in the divorce, it is important to decide if it makes good financial sense. A detailed analysis of post-divorce income and expenses should take place to gain a better understanding of how much keeping the home will cost each month – and in the future – to determine whether it is financially prudent.
How to Buy the Other Spouse’s Equity in the Home
The first obstacle to clear for those wishing to keep the family home in a divorce is how to buy the other spouse’s equity in the home. This might include borrowing additional funds when refinancing the home in one spouse’s name if there is an existing mortgage or trading other marital assets. Taking on the responsibility of a mortgage, and possibly an additional loan to pay the other spouse their share, may or may not fit into a post-divorce budget.
Costly Repairs and Improvements
Another consideration when deciding whether to retain the family residence in a divorce are capital improvement and repair costs that may be lurking just around the corner. Big ticket items such as a new roof, a hot water heater, a furnace, or other home repairs and improvements can be pricey and should be factored into the decision of whether to keep the home or sell it and split the proceeds in a divorce.
Capital Gains Tax on a Family Residence
For houses that have significantly increased in value since the purchase date, a spouse wishing to retain the home after a divorce may want to consider capital gains tax if they have plans to sell the home after the divorce. A single home owner can sell their primary residence and avoid paying capital gains taxes on the first $250,000 of the profits whereas a married couple filing jointly can exclude up to $500,000.
Contact an Experienced Illinois Property Division Lawyer
There are many issues to consider to decide if keeping the family home in a divorce makes good financial sense. No one wants to get into a financial pickle, so it is important to discuss your concerns with an experienced attorney who can help you to determine the best way forward. If you are considering divorce and have questions regarding the division of marital assets including the family residence, contact Illinois property division lawyer Ronald L. Bell & Associates P.C. for more information today.