Going through a divorce is a life-altering event that can be both emotionally and financially taxing. One of the most complicated and sensitive aspects of divorce is handling the family home. Many couples find that the house they once shared becomes a point of contention during divorce proceedings. Whether you decide to sell the home, buy out your spouse’s share, or make other arrangements, understanding the legal and financial factors involved is critical to navigating this process successfully. In this page, we will explore the key considerations that you must take into account when selling a home during a divorce. This will help ensure you make well-informed decisions and protect your financial future.
Richard H. Cole
Partner
Thomas F. Hewner
Partner
Donna L. Haslinger
Partner
Vivian P. Roche'
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Keith R. Rosso
Attorney
Tasha D. Frazie
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Tyler I. Wood
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Marc A. Cangé
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Teresa M. Cappiello
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Understanding Property Division in Divorce 
When it comes to divorce and property division, New York follows the principle of equitable distribution. This means that the court will divide marital assets fairly, but not necessarily equally. The family home, as one of the most significant assets in many marriages, is subject to division. The court considers several factors when deciding how to divide the property, including the length of the marriage, each spouse’s financial and non-financial contributions to the marriage, and the needs of any children involved. If selling the home is the best option, the court will typically ensure that both spouses receive a fair share of the proceeds. However, this division may be influenced by the specific circumstances of the divorce.
Who Keeps the House in Divorce
In some cases, one spouse may wish to keep the family home, particularly if there are children involved. If this is the case, the spouse may need to buy out the other spouse’s share of the property. This requires the home to be properly valued, which can be done by hiring a professional appraiser. Both parties may also need to negotiate the terms of the buyout. In cases where neither spouse wants to keep the home, selling it may be the best option.
However, it’s not always easy to determine who will keep the home. A judge will consider various factors before making this decision. If one spouse is granted primary custody of the children, that spouse may be allowed to stay in the home until the children reach a certain age. In other cases, the judge may determine that selling the home and dividing the proceeds is the most equitable solution.
How Divorce Affects the Sale of a Home
When both spouses agree to sell the family home during the divorce, they must agree on several key factors before the sale can go forward. One of the first steps is determining the home’s market value. This requires an independent appraisal, which can be arranged through a professional real estate agent or an independent appraiser. The value of the home can fluctuate based on the housing market, so it’s essential to be aware of current conditions.
Additionally, the couple must decide on the timing of the sale. If the divorce has already been filed and one spouse moves out, the home may need to be maintained until the sale goes through. This can be a financial strain on both parties. In this situation, both spouses must continue to maintain the home and keep up with mortgage payments, taxes, and utilities, unless an agreement is made about how to handle these responsibilities.
Capital Gains Tax and Divorce
Selling a home can also have tax implications. In the case of a family home, couples may be eligible for a capital gains tax exemption, but only under certain conditions. If the home is sold for a profit, and if both spouses meet the necessary requirements (such as having lived in the home for at least two out of the past five years), they may qualify for a capital gains exemption of up to $500,000. If only one spouse meets the requirements, the exemption is reduced to $250,000.
It’s important to understand how capital gains tax works during a divorce, as the sale of the home may create a significant financial liability. A tax professional can help you understand how to minimize your tax liability and ensure that you’re making the best financial decisions for your future.
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Mortgage Considerations During Divorce
When one spouse wishes to keep the family home, there may be significant mortgage-related issues that need to be addressed. If both spouses are listed on the mortgage, it may be necessary to refinance the loan so that the spouse who is keeping the home is solely responsible for the mortgage payments. This process may involve credit checks and the approval of the lender, especially if the refinancing spouse’s income has changed due to the divorce. If refinancing isn’t an option, one spouse may be required to sell the home and divide the proceeds.
Additionally, if the house is sold, the mortgage debt must be paid off before any proceeds can be divided. If the proceeds from the sale don’t cover the mortgage, both parties may be left with outstanding debt. This could affect the financial stability of both spouses after the divorce. Consulting with a financial advisor or real estate expert can help you navigate the financial challenges of selling a home during divorce.
Dividing the Proceeds from the Sale
Once the house is sold, the proceeds must be divided. While the division of proceeds is typically based on the equitable distribution laws in New York, other factors may come into play, including the contributions of each spouse toward the purchase and maintenance of the home. If there are children involved, the spouse with primary custody may receive a larger share of the proceeds to help with housing costs for the children.
If one spouse has already moved out and no longer lives in the home, the proceeds from the sale may be used to buy a new home or provide financial support for the spouse who remains in the marital home. The court may also consider other assets, such as retirement accounts or savings, in determining how to divide the proceeds.
The Real Estate Market and Divorce
The timing of the sale of the family home is influenced by the real estate market. If the market is strong and home values are high, selling the home may be financially advantageous. On the other hand, if the market is slow, selling the home may result in a loss. Couples should carefully consider the market conditions when deciding whether to sell during the divorce process. It’s essential to work with a real estate agent who understands the local market and can provide insight into current trends.
It’s also worth noting that selling a home in a slow market can take longer than expected. This delay may affect the divorce process, particularly if both spouses are eager to finalize the divorce and move forward with their lives. In some cases, it may be more practical to wait until the market improves before selling the home.
What Happens If You Can’t Sell the House
There are times when selling the home may not be a viable option. If the housing market is weak, the house is underwater (meaning the mortgage balance is higher than the property value), or neither spouse is willing to sell, other arrangements must be made. In these situations, one spouse may need to buy out the other’s interest in the home. The valuation of the home must be fair and agreed upon by both parties. In some cases, the couple may agree to continue living in the home together until it can be sold at a later date.
In rare cases, the home may be retained by both spouses if they agree to co-own it until they can sell it or until other arrangements are made. This can be a difficult situation, especially if there are ongoing financial disagreements between the spouses. It’s crucial to have the assistance of legal and financial professionals when navigating these complex issues.
The Role of Legal and Real Estate Professionals
Selling a home during a divorce is not only a legal process but also a financial one. Therefore, it’s essential to work with both a divorce attorney and a real estate professional who understand the intricacies of divorce property division. Your attorney can guide you through the legal aspects of the divorce, including property division and negotiations. A real estate agent with experience in divorce cases can help with home valuation, negotiations, and finding a buyer. Together, these professionals can ensure that the sale process runs smoothly and that both spouses are treated fairly.
At Cole, Sorrentino, Hurley, Hewner & Gambino, P.C., we are committed to helping clients navigate the complex financial and legal aspects of divorce. If you’re considering selling your home during a divorce, contact us today for expert advice and support.
Selling a home during a divorce is a multifaceted process that involves both legal and financial considerations. By understanding the key aspects of property division, tax implications, mortgage responsibilities, and market conditions, you can make informed decisions that protect your financial future. Whether you’re selling the home or negotiating a buyout, having experienced legal and real estate professionals by your side is essential for ensuring a smooth transition.
If you are facing a divorce and need guidance on the sale of your family home, reach out to Cole, Sorrentino, Hurley, Hewner & Gambino, P.C. for expert assistance. We are here to help you through every step of the process and ensure that your interests are protected.