When you go through divorce, you’ll be confronted with many decisions that affect your financial future. One of those decisions concerns the family home. Because many people hold strong attachments to their home, deciding whether to sell or keep it can be incredibly emotional. This is especially true if children are involved. If you’ve reached that decision in your divorce, you may be wondering “how do I buy out a house from a spouse?” In this article, we discuss the answer that question. To learn more, contact a divorce lawyer at the Law Offices of Rick D. Banks today.
Can I Afford to Keep My Family Home?
If the court grants you more time to spend with your children, you might feel as if you should keep your family home. Amidst the many changes associated with divorce, many parents seek to provide as much stability as possible to their children. Although the family home can provide that feeling of stability, keeping your home isn’t always the best financial decision.
You must keep a realistic sense on whether you can afford to keep your home. While staying in the same place, and avoiding the stress of moving, can seem like a good idea, digging yourself into debt can endanger your family in the long run. Giving your spouse all your other assets in order to buy them out can strip you of the ability to pay the mortgage or property taxes. Before you ask “how do I buy out a house from a spouse?”, you first need to ask “can I afford to buy out my spouse?”
If you can afford to keep your family home, you can move to the next step and buy out your spouse’s share of the property.
How Do I Buy Out a House From a Spouse in California?
Under California law, courts rule that all property bought or earned during a marriage must be divided equally during divorce. This “community property” includes the family home.
Because a home cannot be physically divided, spouses have the option of buying out the other spouse’s interest in the property. To start this process, you both must first establish an acceptable buy out value. If you both cannot agree on the value, then consider hiring a professional appraiser. The appraiser will look at the fair market value of your home to determine the value. After you have the buy out value, then you will need to present 50% of that value (minus any debts on the home) to your spouse.
Keep in mind that your spouse is entitled to any other separate property contributions they made towards buying the home. For instance, if your spouse spent $30,000 towards the home in pre-marriage savings, then they are entitled for reimbursement for that $30,000 when you buy them out. That means that when must provide 50% of the home’s equity plus the cost of their reimbursements.
Claims concerning separate property reimbursement is often complicated. If you find yourself in this type of situation, then consult your family law attorney for assistance.
In addition to the above costs of buying out your spouse, you must also plan for potential negative capital gains taxes should you want to sell the home in the future. Consult your tax adviser to determine those future costs.
What If We Sell Our Home Instead?
If you decide you cannot afford your home, and your spouse agrees, then you can sell your home instead. But before you do that, you must workout the following issues:
- determining the listing price
- finding a trustworthy real estate agent
- reviewing potential offers
- covering the costs associated with selling a home
Typically, when spouses agree to sell the family home they will split all the net profits equally. For instance, if the entire net profit of the sale is $200,000, then you both will receive $100,000 each. However, separate property reimbursements must also be addressed.
Considering Buying Out a House From Your Spouse? A Divorce Lawyer Can Help
Deciding the fate of the family home during divorce can be both stressful and emotional. Because of the memories associated with the home, you and your spouse may have a measure of sentimental attachment to it. If you wish to keep your home and want to buy out your spouse, speak with an experienced Fresno CA family law attorney at the Law Offices of Rick D. Banks today.