What Happens with Your Mortgage In a Divorce?
Divorce is one of the most traumatic events in one’s life. We understand how difficult it can be. We approach the subject with a keen sensitivity and listen with an open mind. Granted, I am not a marriage counselor, but I am sometimes the first person to hear about an impending divorce. I have often known before the partner. And I am not a relationship expert, nor should I be providing marriage advice, but the team at GoPrime in California can help those going through a divorce better understand the financial aspects of the decision.
Sometimes, a marriage is not for better or worse and there are dozens of reasons that a relationship ends. But a divorce mean so much more than just ending a relationship. There are a lot of combined assets that will need to be sorted out as you move forward. What do you need to know about your home or mortgage in the event of a divorce?
If You Sell a Home
There are some important things to know if you plan to sell a house as a result of divorce. When you sell a home and file your taxes as “single” for the first time since your marriage, you can exclude $250,000 in home sale profits. But for couples still filing joint taxes, the amount to exclude is $500,000. But don’t forget about the IRS’s fine print about the partial exclusion. It states that your home needs to be the primary residence for all family members and that you have lived in it for at least two of the past five years. An exclusion can only be used once every two years.
There are other moving parts as well. The divorce agreement may state that one partner is to remain in the home until the children have left. But if the other partner hasn’t lived in that home as a primary residence, they may have to pay capital gains on their portion of the house sale once it’s on the market. While this sounds tricky, it’s not an impossible situation and an independent mortgage lender can help connect you with a professional CPA, to assist in navigating the process in California.
If You Buy a Home
But what if you’re not the person getting a divorce? What if you find your California dream home and discover that it’s being sold by a divorced couple?
It can appear to be a great deal for you financially, but there are things you need to know before you sign your contracts. Homes sold by couples who are getting a divorce are sometimes sold below market value because neither party has an interest in maintaining the home and their motivation to sell is high.
If you’re buying, this is a perfect way to get an amazing deal in the high cost California real estate market. But, as always, you should be aware of obstacles that might get in your way.
There is always risk for being caught in the middle of the dispute between former spouses. Each partner may be on a different page about selling the house and if either raise an objection, it could put the purchase of your home into jeopardy.
Deciding to buy a house under these circumstances will be an incredibly personal decision. And if the information isn’t readily available, you may be able tell if a home is part of a contested divorce through context clues. For example, if you see only one person’s personal items in a home, it may be on the market due to a divorce.
Whether you’re part of a divorcing couple or a homebuyer considering a purchase, your first call should always be to an independent mortgage lender such as Zachery Adam and at GoPrime in California, His experience with California real estate is vast and he is always a phone call or a click away. He and his team can help you navigate the process as smoothly as possible.
If you’re looking to buy your California home, contact Zachery Adam and the team at GoPrime.
Your HomeBuying Partners in California When you buy a home, you’re not alone. There is an entire village of people available to help you through the process. For that reason, it’s important for you to understand the partners who will assist you, their individual...
Preparing for Natural Disasters in California Living in California, you’re keenly aware of the risk of natural disasters. Most specifically, the possibility of an earthquake at any point. Of course, there are other disasters that have impacted California residents,...
Downsizing Your California Home Home prices can be insane in the Bay Area. That means a lot of people are thinking of going smaller. Tapping into the recent trends inspired by Marie Kondo and tiny houses, what do you need to know about downsizing at home? If going...
Let's Get Started