Going through a divorce is rarely an easy process. Most divorces are challenging to get through at the very least. Not only can things get emotionally messy, but there are often a lot of tricky legal matters involved as well. One decision that’s often quite contentious is what to do with the house. If you are getting divorced and own a home with your spouse, then the following are some of the options that you have when it comes to selling the house:
- Divide the profits of the house equally
If neither you nor your spouse wants to keep the house, or if neither of you can afford to keep it, then simply selling it and splitting the profit might be the best decision. However, it’s important that you understand that your divorce can affect how much money you end up pocketing. If you’ve lived in your house for a long time, then your profits may be affected by the capital gains tax.
Couples can exclude upwards of $500,000 in capital gains. If you sell your house for above that amount, any profit over that sum will be taxed. If the divorce is finalized before you sell the house, then you could end up losing more money towards capital gains tax due to the fact that unmarried individuals can only exclude up to $250,000 in capital gains. Continue reading