by Dan Krell © 2008
Separating? Divorcing? Separation and divorce can be one of the most challenging experiences anyone can endure. Even when you decide to work things out amicably, things can become contentious and difficult; disagreements seem to be at the heart of divorce, right? If you haven’t consulted an attorney yet, you should do so to get advice and assistance on the splitting of assets (including your home) and the tax liabilities you may incur.
Splitting couples often do things in haste out of anger, fear, and sometimes (mental) exhaustion. Getting to the nitty-gritty, there’s a lot at stake; making impulsive and rushed decisions can be reckless- especially when it comes to the disposition of the marital home. Before you make a move, explore the options available to you to protect your assets and your financial investment in your home.
Divorce agreements vary with the requirement to sell the marital home. Some separating couples agree to sell immediately, while others agree to sell after a number of years (allowing one spouse to stay in the home). Depending on when your agreement requires the sale of your home, you could owe additional taxes. The tax laws are complex (consult your accountant), however filing jointly would allow you to claim up to $500,000 in real estate capital gains without being taxed, while filing individually only allows you to claim up to $250,000 real estate capital gains without being taxed.
When it comes time to sell your home, finding a Realtor who has experience with divorcing couples can make the sale go smooth. Before hiring a Realtor, interviewing several can give you an idea of their communication skills and experience. It is wise to hire a Realtor who is neutral and can work with you and your spouse; hiring a Realtor because they are a relative or friend often creates or adds to the spousal discord, which deteriorates communication at a critical time.
Misunderstandings and bad feelings between you and your spouse can undermine the home sale by interrupting communication between all parties. To facilitate a smooth sale, everyone (you, your spouse and your Realtor) should agree on the communication methods to inform each about aspects of the sale, as well as the process to show the home and the preferred method of contract negotiations. By laying the groundwork prior to listing the home, everyone knows what to expect and how the sale process will be executed.
Pricing the home realistically can eliminate a lengthy time on the market. It is good practice for your Realtor to present an analysis of the local and neighborhood market to you and your spouse so as to agree in pricing the home.
Your Realtor should always be discreet about your domestic affairs during the sale. Domestic situations, such as divorce, are not material facts about the home and do not need to be communicated to home buyers. Keeping discretion about your domestic affairs can limit bargain hunters’ “low ball” offers.
Planning and counsel can lessen the overall impact of separation and divorce by exploring your options. If you have a home and are divorcing, consult with your attorney and accountant before agreeing to listing and selling the home.
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of March 31, 2008. Copyright © 2008 Dan Krell.