Sell house before or after divorce

Should we sell the house before or after the divorce? Maybe we should try and keep it to sell down the road?

So, you’ve filed for divorce and you’ve already got a lot on your shoulders. One of the heaviest weights is probably one simple question:

What’s going to happen to the house? Chances are one of you may not even want the house – but, lawyers being lawyers – each party will get a share of the value of the house from somewhere.

So, that begs the question – should you sell it before the divorce? Or should one of you stay and live in it. Will you get more money if you wait until after the divorce is final?

In today’s article, we are going to cover these points:

  • What are your options?
  • A discussion of the pros and cons of both selling and keeping the house.
  • When is the best possible time you should sell the home and why.

Disclaimer: I am not a lawyer or a CPA.  I HIGHLY recommend you consult a professional for the final say on what to do with your Charlotte, NC house.

Because of this, I’m not going to go into the legal arguments about selling your house during a divorce – rather – I am just going to go ahead and speak freely and voice my own personal opinions about this significant aspect of your divorce.

So, here we go! When it comes down to it, honestly you only have two very basic choices:

  1. You can sell the house before the divorce, which usually means you and your spouse will split the profit.
  2. You can sell the house after the divorce, which usually means the person who gets the house keeps the cash. But the person who doesn’t get the house recoups half of the estimated value somewhere else. (Car, Boat, cash, etc.)

Option #1:
Selling the House Before the Divorce

It is highly likely that this is probably what your accountant and/or divorce attorney will recommend. But, it’s not always the correct choice. There are some particular cases where you’d make more money by not selling the house prior to divorce – we will get into that in a minute..

So, what are the pros and cons of selling a house before a divorce in Charlotte?

Why Sell Your House Before the Divorce?

Reason #1 – Higher Capital Gains Tax Write Off

If you sell your house before the divorce, most states allow you to write off capital gains of up to $500,000 from your current year’s taxes. (This is why your accountant thinks this is a good idea!) If you wait to sell your house after the divorce, your maximum write-off drops down to $250,000.

Reason #2 – No Need to Worry About Determining an Equivalent Exchange

If you do sell the house before the divorce, then you and your spouse will have a definite amount of money (the profits from the sale) to split between equally the two of you. You have that money in hand, you can divide it right in half, easy peasy. If one of you keeps the house, you and the lawyers need to negotiate among all the other property to come up with something suitable for an equivalent exchange.

Reason #3 – Put the Past Behind You

Possibly the most compelling reason to sell your house before the divorce is that it gives you the freedom to cut yourself permanently away from your old life. That way, there are no memories – good or bad – about the life you lived in the house and then, once the divorce is over you don’t have to worry about the home being a reminder and you can move on with your life – free from ties to your past.

So, now that you understand the reasons why you should sell the house before the divorce, and how that can affect your taxes and mental well being – let’s talk about the reasons why you might want to keep the house and wait until after the divorce is final to sell.

Option #2:
Sell the House After the Divorce

There are pros and cons to both ways of handling the house, so take some time to read through the list below and really think about which option makes more sense.

Why Sell the House After the Divorce?

Reason #1 – Property is a Great Investment

In the long-term, the value of property always rises. If you wait until after the divorce to sell your house, then you can make a lot more money by allowing the value of your property to rise. However, some states don’t allow you to keep all of the profits, even if you’re divorced.

Be sure to check with your lawyer for more information on your State’s alimony laws.

Reason #2 – One Less Thing to Worry About 

Divorce is a stressful time for everyone. You don’t need the volatility of the real estate market on top of that right now. If you and your wife can easily agree on an equivalent exchange for the house, you may appreciate waiting for a more stable time to get caught up in the world of realty.

Reason #3 – Someplace to Live

In other words, you’ll never do the stereotypical couch-surfing that many men resort to when they’re going through divorce. You’ll sleep in your own bed, in your own house, and you’ll never need to worry about finding a cheap apartment or a friend/relative to stay with.

Whether you sell the house before or after the divorce is a choice you and your wife will have to make together.

If you can’t make up your mind, I recommend selling the house before the divorce to take advantage of the bigger tax write off and the ability to completely move on after everything’s said and done.

So to recap the article:

  1. You can’t keep everything. Whether you sell or keep the house, your wife will end up with an approximately equivalent exchange unless you’re willing to wait a long time.
  2. If you sell the house before the divorce, you get a bigger tax write off, and you get to move on from your previous life as soon as the divorce papers are signed.
  3. If you sell the house after divorce, you won’t have to worry about finding a new place to live and you could make more money down the road as the value of your property goes up.

What you decide to do with that information is up to you.

Whatever you decide to do from here, I wish you the best of luck. I hope that your divorce stays amicable, but more so I hope that you come out of it in one piece, ready to move on and leave your mark on the world.

Even though things seem dismal right now, keep your eye on the big picture.