If you and your spouse buy a home and later decide to divorce, the family home is often your largest asset.
Under the Texas Family Code, the court considers your home community property. This means your home is subject to property division as a result of your decision to divorce. So, now you face the decision of how to deal with your house. Here are some options to consider:
- Keep the house and defer property sale and division because you have minor children. Staying in the family home can be a source of security and stability for your children. Divorce is difficult enough for kids, and when parents keep a home for their children’s sake, it limits the amount of change the children face. They can stay in the same school and continue their social lives with the same friends. If your house lost value during the housing market crash a few years ago, keeping your home provides an opportunity for it to regain value as the housing market recovers. However, keeping your home with you and your ex both paying on the mortgage can also involve challenges. What if your ex fails to make a mortgage payment? In terms of credit, it’s less favorable having the mortgage debt appear on both of your credit reports, which it will. Also under the IRS Section 1041 (http://www.law.cornell.edu/uscode/text/26/1041), you only have up to one year after your divorce is final to transfer assets to your former spouse and have the assets be tax exempt.
- Have one spouse buy the house from the other spouse. This is another option for keeping the family home for the children’s sake, and usually the primary caretaker would buy the home from the other parent. However, it’s possible that once divorced, the spouse who applies as a single person, no longer qualifies for the mortgage loan.
- Sell the house and split the proceeds. If you decide to sell the house and divide the proceeds, you can either decide on how to divide the proceeds based on a settlement agreement or allow the court to decide for you. It is wise to discuss settlement factors with your attorney prior to and during the settlement negotiations.
Divorce can be confusing and complicated. Plus, you have important decisions to make. Find out how our lawyers at C.E. Borman & Associates can help.