A family home is where memories are made. It’s not surprising, then, that it is often a bone of contention when a New Jersey couple decides to divorce. It’s likely that both spouses contributed financially to the purchase of a family or marital home and to its upkeep and payment of bills. Most of the time it’s only when a marriage comes to an end that a couple contemplates what will happen to their home, which is often shared with their children.
A couple of options
There is no cookie cutter way of handling a family home upon divorce. Much depends upon a family’s personal situation. A prenuptial agreement could have spelled out particulars, but a couple could decide to sell the home and divide the equity or hold on to the home and sell it sometime in the future. If one spouse if financially able, he or she might consider buying out the other spouse. This could be the best choice if there are children involved since professionals say it might be better for them to remain where they are.
Think about tax implications
Married couples can exclude up to $500,000 of capital gains on the sale of their homes, while that amount for single individuals is $250,000. Selling the house after a divorce might increase the tax liability, so there must be proper planning before making any decisions. To qualify for a capital gains exclusion in a divorce, two criteria must be met:
- The property must be the principal residence of the seller for at least two of the last five years and
- The owner must prove he or she has owned the home for two of the last five years.
No matter what decision a New Jersey couple is considering regarding their family home upon divorce, it is best they have some idea of the state’s property division laws. It makes sense to obtain independent legal advice from an attorney experienced in family law. Knowing those laws may make it easier to make the best decision possible.