Should You Keep Your House After Divorce?

QuestionMy husband moved out of the house six months ago. I don’t think I can afford to buy him out, and so I am considering moving into the rental condo we have, which means we’d sell our house. But my husband thinks that I should stay in the house until our son leaves for college in four years, and he’s willing to delay selling the house until then. What do you think is the best option for me?

AnswerYou and your husband may each to exclude up to $250,000 of gain when you sell your home, if you have both lived in it for two of the five years before sale. If your husband has been gone from the house for more than three years when it is sold, there is a way you can both still qualify for the $250,000 exclusion. Your old home will be considered to be your husband’s residence if you have been occupying it prior to sale under the terms of a divorce or separation agreement or court order. This new rule opens the door to joint ownership of homes for extended period after divorce.

Here are some things to consider as you make your decision. Will you be comfortable continuing to live in a house he owns? If the house needs a new roof or plumbing, who will pay for it? If you make the monthly house payment, will you get credit for the loan reduction over the next four years, or will the proceeds from sale be split equally, giving him half the benefit?

If you decide to move into the rental condo and sell the house, it is possible that you can exclude gains on the sale of both properties. Let your husband take title to the residence and sell it, while you move into the rental for at least two years, and then sell it. Each of you can exclude up to $250,000 of gain. (If any depreciation was claimed on the rental after May 6, 1997, you will have to pay tax at a 25% rate on that recaptured depreciation.)


  1. I have a question on real estate property, my husband bought the house before we got married, now we are divorcing and we stayed in the house for 7 years but my name is not on the deed. I did not work entire time we’re together, I’m a stay at home mom. Will I be getting anything when he sell the house?

  2. Mary Rotondo says:

    Married 5 years my husband had a hiuse already I sold mine put all 26, 000 into it with in ground pool I figure I would be there for a long time I cooked and used my money to feed everyone my twi biys too I bought landscape plants that cist 1000. And mortgage money have name on deed he wants out but he told me he aint giving me a penny he ssid thst is rent money I live in mi

    • You may be able to recoup the money you put into his house, but each state is different. I don’t know the laws in Michigan, and I’m guessing that you don’t either, so you’ll need to consult with an attorney in your area to find out the answers to these questions.

  3. My husband and I are contemplating separation/divorce after 9.5 years. It is an amicable divorce, our finances are basically already separate and we would just go our separate ways financially. We bought our condo in 2005 prior to the real estate crisis. Although prices are improving, we continue to be underwater and would need to short sale if we both move. I am considering staying, he is willing to let me have the condo. I have been paying the mortgage/dues/taxes solely since 2009 and also contributed the larger portion of our down-payment. But because I have considerable student loan debt, I’m not sure if I will qualify for a refinance by myself. What suggestions would you make? Thank you for your time!

    • First of all, delay finalizing your divorce until you have hit the ten-year mark, so that you can qualify for social security benefits based on his record, when you reach retirement. If you take the condo and make mortgage payments, the principal you receive each month doesn’t build equity, it just reduces the negative equity you have in the home. Zero is zero, so in reality this is similar to renting, but this time from the mortgage company instead of a landlord. So make sure keeping the condo is a sound financial decision that will put you ahead in five years, which is a reasonable time to hold the investment, compared to renting. I don’t know if you’ll qualify for a refinance — that is a question for a mortgage broker. It’s likely you won’t qualify, even with a co-signer, since your home has no equity, so your husband would have to stay on the mortgage until such time in the future as you can refinance. If he won’t do that, then you’ll have to do the short sale.

  4. Cynthia Galvan says:

    question: Married for 30 yrs. The house that we live in the morgage is about the same as a rental of a one bedroom apartment and I have two teen daughters. I live in the state of Florida. Just trying to figure out how I can keep my home and what advise can you give me?

    Thank you,

    • It sounds as though you will be going through a divorce. If you need to pay your husband for his equity in the home, there are three ways to do it: give him other assets (such as retirement accounts), refinance the home (which will raise your payment), or sell the home and live somewhere else (in which case your payment will remain the same and you’ll have some cash from selling the home). If you decide to trade away your interest in retirement assets, be sure that you will have the ability to re-generate those assets between now and retirement age, when you’ll need retirement income.

  5. my husband and are separate but he leave with me and pay 1/4 of the mortgage I am almost done paying off the house can he sale the house without me if I am not in the country. (after I finish paying)

  6. My husband (of 17 years) and I are considering a separation and possible divorce, we’re not sure, just going through personal changes. He wants to buy some property as extra income & a potential future residence. We have a 20 year refinanced mortgage that will be paid off in about 9 years. Neither one of us could afford the mortgage payment alone and rents are extremely high here in western Washington. Should we, as he suggests refinance for a 30 year loan to put $ down on an investment property until we know for sure that we want to divorce or have me keep the house and get a roommate until it’s paid off??
    I’m just 6 years away from planned retirement and don’t want another 30 year mortgage and can’t afford rent.

    • If you separate and there’s a big mortgage on the house, then whoever takes the house takes the mortgage, even though part of the funds went to purchase other property. If that makes keeping the house unaffordable, that would be a problem. I suggest that you consult with a financial planner who can help you assess whether borrowing even more money will benefit you in the long run, especially given your marital situation.

  7. My husband, of almost 10 years, and I are divorcing. We bought a home 2.5 years ago and know the we have very little equity in it right now. We are both willing to rent it and let it “ripen” a bit more before selling it. Is it possible to divorce and not sell the house, or put it under only one of our names? How will that work when it comes to filing taxes once we are divorced? How will all of that need to be filed, if it is at all possible?

    • Tiffany says:

      I have the good credit score and he has the money to pay the note. I wouldn’t be able to put it under my name due to lack of funds, and if we changed the mortgage over to his name only then there is no way he would get the great rate that we received when purchasing the home. The divorce is very amicable and I know that he would not wrong me because he is military and we have a child and he knows that it will ultimately affect our son. We just don’t know if its even something that we could work out, legally.

    • You can agree in your divorce agreement to hold it jointly, and you should specify the terms (who makes the payments if not covered by rents), who pays for extraordinary expenses (e.g., new roof), what triggers the sale, etc. But be careful — to claim a $250,000 exemption from tax on the gain when you sell, you have to have lived there for 2 of the 5 years prior to sale, so you really should sell it within 3 years of moving out.

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