Should you sell your home when you divorce?

A divorce often requires a reassessment of your living arrangements. Questions of whether you should stay in your home, and as important, can you afford to stay in your home arise. If you have children and have lived in the property for any length of time, you may have developed a strong emotional bond with the home. It may contain many of your fondest memories, you child’s first steps, birthday parties, holidays and thousands of others.

As strong as the emotional element may be, during a marriage dissolution, you have to recognize the financial place your home occupies. You need to examine whether you really need its space and location.

The answers may depend on the age of your children. If you have children in elementary school, your needs may be very different from those if you have a single child in their last year or two of high school.

You also need to examine if you, either directly, or with some support provided by your former spouse, if you can afford the property. In addition to a mortgage, you need to calculate the yearly cost of ownership, including the minor and major maintenance costs, such as appliance repair or replacement and long-term items, such as painting the house or the cost of a new roof.

On top of this, you need to analyze the tax consequence of any transaction. If you sell a family home, you may be entitled to receive up to $500,000 in gain on the property. This tax exclusion is useful if your home has appreciated in value, but like most tax-related items, certain rules apply. A mistake in the wording of your divorce settlement or the timing of the sale of the home can derail much or all of your economic benefit.

Source:, “Take advantage of the tax-free home sale gain,” June 28, 2016

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