The Family Home: Love it or List it?
Toddler at table
Divorce brings with it a whirlwind of emotional and practical decisions, and one of the most significant is deciding what to do with the family home. The house often holds sentimental value as a symbol of stability and comfort, particularly if children are involved. However, keeping the family home after a divorce is a complex decision that involves financial, emotional, and logistical considerations.
If you’re grappling with whether to stay in your home or move on, here’s a guide to help you make an informed choice.
Can You Afford It?
The first question you should ask is whether you can afford the house on a single income. Consider all the costs associated with homeownership, including:
Mortgage payments
Property taxes
Insurance
Maintenance and repairs
Utilities
If the house was affordable on two incomes, maintaining it alone may stretch your budget. It’s imperative that you create a detailed budget to see if staying in the home is realistic without sacrificing your financial stability which can affect your emotional stability down the road.
Sentimental Value
The family home may hold significant sentimental value, especially if it’s where you’ve raised children or created cherished memories. Staying might provide a sense of continuity during a time of upheaval, particularly for your kids. However, the children can also find continuity in a new home, as long as you maintain consistency in other areas and work to make the move positive and fun.
On the other hand, staying in the home may also evoke painful memories of the marriage, making it harder to move forward emotionally. Reflect on how staying in the house makes you feel and whether it will help or hinder your healing process. And if you won’t be able to afford it, it may not be worth it to stay.
Is the Home Aligned with Your Future?
Think about your long-term plans. Does staying in the home align with your vision for the future? Is the home too large or expensive for your needs or budget? Do you plan to relocate anytime? If you keep the house as an investment, will it appreciate in value?
What’s the Real Estate Market Like?
Consider the current real estate market when making your decision. If it’s a seller’s market, you might get a great price for the home if you sell. Conversely, if it’s a buyer’s market, holding onto the home could make more sense until conditions improve.
Legal and Tax Implications
The family home is typically considered a marital asset, and its division will depend on the laws in your jurisdiction. Keeping the home may require giving up other assets in the divorce settlement, such as retirement savings or investments. However, selling the home can have tax implications, especially regarding capital gains. Consult a tax professional to understand how selling or keeping the home might affect your tax liability.
Alternatives to Keeping the Family Home
If keeping the home doesn’t make sense financially or emotionally, here are some alternatives to consider:
Sell the Home and Split the Proceeds Selling the home can provide a clean break and give both parties financial resources to start fresh. This option is particularly useful if neither spouse can afford the home independently.
Buyout If the house is jointly owned, you may need to buy out your ex-spouse’s share of the equity which may involve refinancing in your name alone. Talk to your bank about your ability to qualify for a loan.
Co-Own the Home Temporarily In some cases, ex-spouses agree to co-own the home for a set period, such as until the children graduate from high school. This arrangement allows the children to stay in the home while giving both parents time to stabilize their finances. However, this requires a strong co-parenting relationship and clear agreements on expenses.
Rent Out the Home If you’re not ready to sell but can’t afford to live in the home, renting it out could provide income to cover the mortgage and other expenses. This option requires careful planning and management but can keep the property as an investment.
Take the time to evaluate your options, consult professionals (such as financial advisors, real estate agents, and lawyers), and communicate openly with your ex-spouse if possible. Whether you decide to stay, sell, or explore other alternatives, the most important thing is to choose what’s best for your well-being and future stability.
