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Part II: Should you sell your house before or after a divorce?

On Behalf of | May 3, 2021 | Property division

As regular readers of our blog know, we wrote recently about the pros and cons of selling your Orange County house before your divorce.

In this post, we’re going to look at the other side of the issue.

Pros and cons of selling after the divorce

  • Pro: selling your house after the divorce allows time for improved communications with your former spouse. Time can help to heal wounds, so a combative relationship might become less so after divorce issues have been resolved. Also, a sale after the divorce means the house can no longer be a weapon in those proceedings, which might also help to foster the cooperation needed to sell the property.
  • Con: a residential real estate sales site points out that the longer the sale is put off, the longer you are tied to your ex. Consider: though you will no longer be married to your ex, you’ll remain married to your mortgage until that sale is final. Until the house is gone, you and your former spouse will have to cooperate on making mortgage payments, upkeep, utilities and so on.
  • Con: the possibility of a painful capital gains tax. After a divorce, each party can exclude up to $250,000 gained on the sale of your main residence from the capital gains tax. You must have lived there for at least two of the five years prior to the sale. So if you move out and the sale is delayed several years, you could wind up losing that substantial capital gains exclusion. Factor in the timing when you and your attorney are negotiating the property settlement.

A family law attorney and a financial advisor can help you weigh these pros and cons and others as you work your way through property division issues in your divorce.