How to Sell a House During a Divorce

Written by Jonathan Breeden

August 26, 2022

One of the most hotly contested topics during divorce is the family home. The house you bought as a married couple probably represents one of the most significant financial investments you made, and there is likely a lot to consider. Who gets the house? Will your children continue to live there? Who pays the mortgage?

Keep reading to learn how to sell a house during a divorce and what to do if one spouse objects.

What To Do with the Family Home

When it’s time to divide marital property, deciding to sell the house is often the practical option.

A divorced couple won’t want to remain in the same house. However, it might be too expensive to keep the house while setting up another household.

Buying Out a Spouse’s Share

One option is for one spouse to buy out the other’s share. The first step in a buy-out is a professional appraisal. Although North Carolina has equitable distribution laws, knowing what the home is worth can at least begin negotiation between spouses.

Several factors influence the buy-out price:

  • Home’s equity
  • Each spouse’s contributions in the purchase and upkeep during the marriage

The spouse who wants to buy must have access to money that isn’t subject to marital property division. They’ll also have to show that they can afford the mortgage on a single income. It’s possible to refinance the home as part of the buy-out.

Selling the House & Splitting the Profits

Many divorcing couples decide that it’s not practical to keep the house. Although one spouse usually remains in the house during divorce proceedings, both parties need to work together to get the house ready to sell.

The proceeds of the house are subject to equitable distribution. Some couples agree to split the profits evenly after all debts are paid.

Tax Advantages of Selling Before Divorce Decree

It may be financially advantageous to sell the house before finalizing the divorce.

Under the Home Sale Tax Exclusion, married couples who sell don’t have to pay capital gains taxes for profits of $500,000 or less. For single homeowners, the exclusion cap is $250,000. To be eligible for the exclusion, you must have lived in your home as a primary residence for two of the last five years.

Negotiating with Other Assets

In a high-asset divorce, spouses can negotiate for the family home. For example, one spouse might take a vacation home or keep their pension. Everything within the marital property portfolio is negotiable. North Carolina statutes require an equitable, not identical, distribution of marital assets and debts.

Negotiation Eliminates Selling the House

Negotiating with real property or other assets eliminates the stress of selling the house during a divorce. For marriages with young children, it’s enough emotional upheaval for their parents to split without losing the only home they know.

This option requires careful valuation of all assets.

Incentivizing a Reluctant Spouse

A spouse who doesn’t want to sell the house, won’t be bought out, and refuses to negotiate might respond to financial incentives. The spouse who wants to sell offers additional money from their share of the proceeds. Or they can offer another asset, such as a car.

Co-Ownership After Divorce

If both parties want their children to remain the home but neither spouse can afford a buy-out, you could opt to remain co-owners. Spouses create a legal agreement on how to divide mortgage payments and repairs.

Potential Legal Problems

Co-owning the family home with a former spouse makes you vulnerable to legal and financial problems. If the person charged with making the mortgage payment is late, your credit scores take a hit.

When it’s time to sell, the individual who doesn’t live in the house as a primary residence for at least two of the last five years isn’t protected by home sale tax exclusion. The capital gains tax could be significant.

Filing a Petition to Partition

If both parties are already divorced and the house was not dealt with legally prior to the divorce, the spouse who wants to sell may file a petition to partition with the court. Divorce or legal separation establishes grounds for division in a divorce for jointly owned marital assets. A partition is a legal process for dividing real property into shares after the parties are divorced.

Get Answers from a North Carolina Divorce Lawyer

Selling the family home during a divorce often creates more questions than answers. An experienced North Carolina divorce attorney uses in-depth knowledge of state statutes to protect your legal and financial interests.

The Breeden Law Office handles high-asset divorces, child custody issues, and other family law matters. Schedule an initial consultation today. Contact us online or call (919) 661-4970.


Divorce In North Carolina: What You Need To Know

A book by Jonathan Breeden