Owning a home while going through a divorce can be detrimental to your situation, especially your taxes. Many couples will keep the marital home even after the divorce has been finalized, with one of the spouses living in it with the children. Others will sell the home after the divorce. It’s even better for you to sell the marital home prior to the divorce, and we explain why in this post.
The timing of the potential sale means a lot. If the market is hot well before you have filed for divorce, but the two of you agreed that it is time to file for divorce, it might be best to sell the home prior to the divorce being finalized. Take advantage of the market if you know where your marriage is headed.
Capital gains are a big advantage to selling the home while still married. You will be able to claim the $500,000 exclusion on capital gains. The capitals gains exclusion drops in half when you get divorced. If this isn’t reason enough to sell the home before the divorce is finalized, you won’t find a much better one out there.
The sale of your home should be kept private. No one needs to know how much you made from the sale. If you sell the home during divorce, the public can find out quite a bit since divorce proceedings are public information. Sell the home while still married, and it can be kept out of the public eye.
Deciding to sell the marital home before you get divorced can be one of the most difficult decisions you will ever have to make. As you can see, it could be a smart move for you and your soon-to-be former spouse.