Can I keep my home? 

If you are hoping to stay in the house, there are a lot of questions that need to be resolved immediately.

Can you afford to make the mortgage payments (if any), or is the house paid off?

First and foremost, if there is a mortgage balance on the house, we need to find out if you can qualify to refinance. Qualifying with one income source may be challenging, so it is important to work with a lender who specializes in divorce. I can make that connection for you. If spousal support (alimony) and/or child support are going to be part of the settlement, those will have a bearing on one’s ability to afford the home. If you will not be receiving spousal support, you'll need to earn enough income to continue making the mortgage payments. To do that, you'll need a secure job and sufficient wages or salary.

Can you afford to continue the other costs of upkeep, such as insurance, taxes, and repairs?

We need to determine your total monthly expenses regarding the house and consider whether your income will be sufficient. Remember that property taxes can be extremely high, and regular maintenance and repairs will be necessary. I provide analysis to determine if you could, and more importantly, should, keep the home.

Do you have the financial ability to buy out your spouse in return for keeping the house?

Often, divorcing spouses are forced to compromise and trade various assets. For example, one spouse may want the house, while the other might keep their pension, retirement accounts, or other investment accounts. This isn't always the case, but it may be the only way to reach an equitable agreement.

Do you have minor children?

If you have minor children, you are focused on what is best for them. You may decide that keeping them at the home is important. If a buyout is not an option or a desirable scenario, there are some common arrangements, and some uncommon arrangements, we can explore:

  1. We can find a ratio to share the mortgage and retain ownership of the home that is workable for each of you. This may be for a finite period, such as until the kids ae in junior high or high school, or indefinite.

  2. One spouse could have a schedule over which to buyout the other. This could be over several years if both parties are agreeable to it.

  3. “Nesting”, or “birdnesting”, is when the kids stay at the family home, and the parents alternate staying with them. Sometimes the divorced couple will buy or rent a small place nearby, or they can stay with friends or a significant other.

  4. If you have the space, you might even consider building an Accessory Dwelling Unit (ADU). You can use it for either a nesting arrangement as above, or to create an additional revenue stream that one spouse can use to qualify for refinancing or pay for the mortgage.

What are the potential tax liabilities?

Transactions between spouses incident to a divorce are not taxable. Nevertheless, if one spouse becomes sole owner of the family house pursuant to a divorce settlement and later sells it, the entire capital gain tax liability will be his or hers alone. There is the ability to use the $250,000 capital gain tax exclusion, or $500,000 if the ownership was shared and met certain criteria (which we will discuss in detail if that situation arises).