When going through a divorce, deciding what to do with a house can be a difficult financial experience, so MarketWatch staffer Daniel Goldstein spoke to financial planners to see how they recommend approaching the matter.
First, it pays to get a restraining order on the sale of the house or any other financial assets, they say, so one party doesn’t have to worry about the other selling a home they no longer live in without their consent.
Still, selling the house and splitting the proceeds is often the easiest way to settle the difference, says Douglas Boneparth, a financial planner in New York with Longwave Financial LLC, but tax issues, such as transfer taxes and capital gains taxes, are often tricky. For example, while a married couple can exclude $500,000 in capital gains taxes from the sale of a home, it’s only $250,000 for a single person.
Because of that, it’s important to keep both parties on the deed until the house is sold to keep the full capital gains tax break, says George Gagliardi, a financial adviser with Coromandel Wealth Management in Lexington, Mass., and it can’t be more than three years after one of the parties leaves the home, he said. The temporary ownership arrangement must also be documented in the divorce agreement and on the deed, he added.