Divorce house buyout may seem to add more complications in the divorce process. Getting a divorce can bring a lot of stress on yourself, your spouse and your entire family. From splitting your belongings to going into court and everything in between – one of the things you will also need to consider is who will keep the house. Will you sell it? Will you rent it out? There are plenty of options out there – but one of them is divorce house buyout.

In this article, I will present what is a divorce house buyout, how to reach a divorce house buyout agreement and what are the best options you can consider when facing a divorce.

Let’s do this step by step.

What is a buyout?

If you’re completely new to real estate, you might be asking yourself ‘what is a buyout’ in the first place.

In the case of a divorce, the ex-partners will have to decide on splitting their belongings, assets, and even property.

This is where divorce buyout comes in.

Selling a house during divorce might sometimes be a harder emotional investment and often it is just easier to buyout the house from your ex spouse. This means that the person who wishes to keep the home will pay for the mortgage of the house.

As an example, if you bought your home for $1,000,000 and put a mortgage of $600,000, the buyout is equal to $400,000 and is paid by the person who wishes to keep the home. Can’t decide who should make the buyout? Keep on reading!

Things to consider before divorce house buyout:

• Can you financially afford it? (you will also have to take care of the real estate taxes)
• You will need to completely refinance the house to avoid any bank debt.
• How will you divide expenses?
• At what date will the buyout occur? Make sure the date is set.
• Who is buying the house?
• Speak to a mortgage professional.

How to reach a divorce house buyout agreement

If possible, make sure to communicate everything with your ex-spouse. Divide the assets, weigh out pros and cons and speak to a lawyer or a personal finance assistant who can help you come up with a buyout payment plan.

Is a divorce house buyout common?

Yes! In fact, it often is a part of the divorce settlement. Usually one of the people in the couple ends up buying the property (which includes refinance the old loan and taking out a new loan if applicable) or they give up their second home (which should be worth about the same amount).

Do I need a lawyer?

If you’re on good terms with your spouse, a lawyer will not be necessary. However, if you cannot reach any kind of agreement on your divorce, you need to hire a divorce lawyer to make sure your possessions will be divided equally and in a fair way. Please note that if you are not on good terms with your spouse, getting a divorce lawyer might mean it will take a longer time before a buyout decision is made.

Do I need to worry about taxes when we do a buyout of the house?

No. Taxes and capital gains are only applied if you and your spouse decide to sell the house or if the buyout occurs and the person who is buying the house later decides to sell the property.

According to DivorceNet, “If you sell your house, you and your spouse can each exclude the first $250,000 of gain from your taxable income.” This, of course, depends on the state you live in, however, taxes do not apply when a divorce house buyout is made.

Anything else I need to know about a buyout?

Real estate agents don’t usually get involved in the buyout process. This means that determining the value will be a lot harder – or, in fact, easier. Sit down with your spouse and put a value on your property. If no agreement is made, do some research on properties currently being sold in your area. If nothing works and you can’t get to an agreement, you will have to hire a real estate appraiser who will determine the value of your home.

What are some refinancing issues when it comes to a buyout?

As mentioned earlier, you will need to refinance the mortgage on the house. You can either take out a loan which will help pay off the old loan or simply refinance the loan by yourself. You also need to ask yourself how will this affect your interest rate and whether or not your credit score allows you to take out a new mortgage.

Sole owner of the house math made simple:

Principal balance + equity = loan amount
Principal balance + ½ of equity = payoff
In other words, the buyout payoff equals the principal balance of your mortgage and half of equity.

What is equity?

Equity simply means the value of the property which excludes the mortgage. Please note that due to the value of the property being different on a daily basis, you will need to recalculate equity often.

Selling your house after divorce

Another option is, of course, to sell your house after a divorce. If you’re looking to sell your house fast and without a fuss, check out Matt Buys Houses TX. We take any kinds of houses (even those that need repairs) and we give an offer within 24 hours. Your house can be sold in a week!

Even if you don’t sell to Matt Buys Houses TX, feel free to ask us any questions you may have regarding selling your house. We’ve helped hundreds of homeowners sell their San Antonio houses. Give us a call now at 210-596-9669.
 

The information presented in this article is for educational purposes only and should not be considered legal, financial, or as any other type of advice.

Divorce brings a toll on everything in your life – you are suddenly single, you need to decide how you will divide your belongings, kids, pets and, of course, who gets the house in a divorce. It’s an emotional and stressful process that sometimes takes years to end – but it doesn’t have to be.

In this article I will talk about who gets the house in a divorce, divorce property settlement, what happens to the house during the divorce process, who gets what and marital home rights.

Are you ready? Let’s go!

Let’s start at the beginning.

HowStuffWorks defines 3 steps of divorce:

• Separation
• Divorce property settlement
• Child support and alimony

In this article, we will look at step number 2 bit closer.

Who Gets The House In A Divorce?

Also known as divorce property settlement.

Normally, properties are categorized in two different types: Marital, and Separate.

Separate property

Please note that the definitions of Separate Properties vary by state, but normally, Separate Property refers to properties owned by the person before the marriage, a property you have inherited before or after the marriage or a property which you have received as a gift.

When you add your spouse as a co-owner of the property, you lose the Separate Property status – the property is now Marital Property.

Marital Property

Here’s how GalTime defines Marital property:”Marital Property consists of all income and assets acquired by either spouse during the marriage including, but not limited to: Pension Plans; 401Ks, IRAs and other Retirement Plans; Deferred Compensation; Stock Options; Restricted Stocks and other equity; Bonuses; Commissions; Country Club memberships; Annuities; Life Insurance (especially those with cash values); Brokerage accounts – mutual funds, stocks, bonds, etc; Bank Accounts – Checking, Savings, Christmas Club, CDs, etc; Closely-held businesses; Professional Practices and licenses; Real Estate; Limited Partnerships; Cars, boats, etc; Art, antiques; Tax refunds.”

When is Separate property considered Marital Property?

Some states will also differ between Active and Passive Appreciation when it comes to Separate vs. Marital Property.

Active Appreciation simply means that your partner contributes directly or indirectly to the house income.

Passive Appreciation is a bit more complicated. If you used any of your marital income on your personal property, it can be considered as a marital property.

So who gets what?

When dividing your assets, these things are taken into consideration:

• How long your marriage lasted
• Separately calculated income of the spouses
• Living style and standards
• Your emotional and physical health
• Financial situation after the divorce
• Custody needs

Divorce takes time and it involves more than just you and your spouse. When you’re dealing with divorce property settlement, it’s best to hire a divorce lawyer. However, by doing so it makes it impossible to predict who will get what, including who gets the house in a divorce.

When should you take your divorce to court?

Hire a reputable divorce lawyer first – they will do their best to help you settle things in a civilized matter. If your spouse is not cooperating or refuses to get in contact, that’s when you should consider taking divorce to court.

I also suggest taking a look at The Uniform Marriage and Divorce Act which looks closely at property settlement laws for eight states as well as child custody, the division assets and more. All your questions about who gets the house in a divorce will be answered.

What about divorce house buyout?

In a buyout, you will first have to determine the value of the house.

The easiest and simplest way to determine the value of the house is to sit down with your spouse and agree on it – however, it is hardly ever that simple. Again, this is where your divorce lawyer or your financial advisor will be able to help you.

Can I be forced to give up the house?

In order to avoid having to give up the house, you need to make sure you agree on some kind of a financial settlement. This is where a buyout comes into play. If you’re financially unable to fulfill the court requests, the best option is to sell the house and opt out to buy a house with a smaller value.

The court often also takes the welfare of your children into consideration – often the children stay in the family home due to the number of assets, the lifestyle and the courtesy of causing as little disrupting as possible.

So what should my first steps be?

Firstly, I suggest sitting down with your spouse and really talk about who gets the house in a divorce. Determine how you will divide your assets, think of custody and property settlement. If a decision has been made or in the case of no cooperation, your next step would be to contact the divorce lawyer and determine whether you need to take things to court.

Divorce is a complicated process and often the most stressful time for most people. Think clearly and don’t make any quick decisions, especially if you have children. If possible, make sure that things are fair and understandable for both parties.

Thinking of selling your house after the divorce?

Give us a call on 210-596-9669 – we buy houses and give you a cash offer within 24 hours – your house could be sold in a week! Moving on has never been this easy. Are you worried about repairs? Don’t be – we will take a house in any given state.

We’ve helped hundreds of homeowners sell their San Antonio houses. Give us a call on 210-596-9669 to receive your first quote! We will answer any real estate questions you might have.
 

The information presented in this article is for educational purposes only and should not be considered legal, financial, or as any other type of advice.