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Dealing with the family home in a divorce

On Behalf of | Aug 19, 2023 | Divorce

California is a community property state, which means that marital assets are generally split in a 50/50 fashion in a divorce order. This means that you may cede half of the equity in your home to your spouse when your marriage comes to an end. However, it’s also possible that you will be able to retain the home as part of the final settlement.

You can buy out your spouse

If you have the means to pay holding, maintenance and other costs, you can ask to retain ownership of the marital home. In such a scenario, you would either refinance your current mortgage to cash out any equity that it currently has. The equity is then distributed between yourself and your spouse per the terms of the divorce settlement. You can also withdraw funds from a savings or brokerage account to pay whatever your spouse is owed. Alternatively, you can allow your spouse to retain ownership of the house in exchange for a lump sum payment.

You can sell the house

In many cases, a family home is sold pursuant to a divorce. After the sale is complete, any proceeds remaining after paying off the mortgage and closing costs are split evenly. For tax purposes, it may be best to sell the home prior to finalizing your high-asset divorce because of the capital gains exclusion.

The family home is one of many assets that will likely be split in a divorce settlement. Other items may include a retirement account, car or the funds inside of a joint bank account. It may be possible to keep your home in exchange for these assets or by proving that it should be labeled as a separate asset acquired before the marriage took place.