While there are many reasons one might wish to keep a home following a divorce, it may make sense in many cases to sell the home instead. Here is what Georgia residents need to know when evaluating what to do with a marital house.
First, one should consider what he or she must trade in order to keep the home. This may involve giving up a 401(k), a pension, investments or savings. The amount one must trade to secure a home might hinder financial security and stability. Additionally, affording a home on one salary can be a hardship. One must consider the costs of property tax, mortgages, insurance and home maintenance.
Depending on where one lives, high capital gains taxes might apply. When a couple sells a home, capital gains can be excluded up to $500,000 before owing tax. When one person sells a property, only $250,000 can be excluded before owing money. This could result in tens of thousands in taxes.
Even if one can pay for a house, other living expenses should also be considered. If finances are secure, emotional reasons might make parting with a home difficult. Some parents worry about selling the home while a child is still growing up or away at college while others are proud of their home and do not feel ready to let go of it. Moving can also be difficult, and it may be challenging to move to a smaller house and get rid of possessions.
Selling a home can be an emotional process, but it is often the right choice financially. Dealing with uncomfortable feelings in the short term may be better than facing inadequate expenses in the long term. When divorcing, both parties must typically compromise when it comes to property division in order to reach an agreement that benefits both people.