If you’re getting a divorce in New Jersey and own a home, you’ll need to decide what to do with it. In this situation you have three choices. You can sell your home, continue to co-own the house or have one of you buy the other out. Each of these scenarios has pros and cons. Understanding them can help you make the best decision.
Co-own the house
When you and your ex-spouse can get along after divorcing, you may want to co-own the house. Doing so can help maintain stability for your children, and it provides flexibility if you’re in a down market. In this situation, both of you will share the costs and profits related to the property. However, there are a few cons. After you divorce, there’s a lower tax exclusion limit. When selling individually, the tax benefit exclusion is $250,000. Selling before you get divorced allows you to exclude $500,000.
Sell your home
Selling your home after a divorce is another option. You can split the proceeds, providing a clean break. If you don’t have any children, this option may be ideal. On the downside, one of you may be making a mistake and find it challenging to get into new housing after your divorce. This situation can occur if one of you has a low credit score.
Buy the other out
If one of you wants to stay in the home, buying out the other spouse is an option. Going this route can also leave minimal disruption for your children. However, securing a loan and affordable payment may not be possible. In addition, the buyer will be responsible for covering selling costs independently in the future if they sell the home.
Examining the three major choices you have when you own a home and get divorced is essential. Doing so allows you to weigh the advantages and disadvantages to make the most informed decision.