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.)

33 thoughts on “Should You Keep Your House After Divorce?”

  1. I live in Illinois, an equity state. Been married for 40 years. Everything we have we got together. We paid the house off and he walked out just a few months later. He rented a place with his new love. I was blindsided, no clue it was coming. Between his pension (I’m joint annuitant) and his 401k accounts; which I’m told I should get half of, I should be able to buy him out. Do I want the house, even though it will take my retirement money? I only have 7 years before retirement.

    1. You are asking me if you want the house? I think that’s your decision, since you’d be the one living there, not me. But if you are planning to trade most or all of your retirement accounts for equity in the house, is that something he’d be willing to take? He may want cash for his equity, so he can buy another house. If he is willing to take retirement assets, you’ll need to figure out what you’ll be living on when you retire. You can’t eat the house, or drive the house, or wear the house, so you’ll need to draw from retirement funds to replace your salary when you retire. Will you have enough left over from buying him out of the house, plus what you are able to accumulate in only 7 more years? If not, where will you get the funds you need to pay your expenses?

  2. Hello. Is there such a thing as arrears with QUADRO? My divorce has not been finalized yet but I’m seeing in the divorce petition, that my spouse is requesting arrears for the QUADRO. I was under the impression that the QUADRO payments will be finalized when divorce is finalized and that’s when payments will start.

    1. The laws are different in each state. If the pension is already making payments to the retired spouse, then the non-employee spouse is entitled to their share of those payments from a certain date. You’ll need to talk to someone familiar with the laws of your state to see what your state says that date is that the non-employee spouse can start receiving payments.

      1. My spouse does not currently receive payments as the divorce is still being finalized. I didn’t think of have to start paying until the divorce was final since military pension is considered property.

        1. If neither of you is receiving payments, then you are correct. If the pension is yours, and you are receiving payments, and your spouse is entitled to a portion of the pension as property, then it seems to me that you are receiving payments on his behalf and owe those funds to him. But I’m not an attorney so you’ll need to rely on your own legal advice.

  3. I married my husband in 12/1/1978 and we divorce 2/1992. My question is can I still get part of his 401. I know that he is not working for the same company when we were married. We have two kids together in our married also and he didn’t like paying child support. And he remarried 30 days after our divorce.

    1. If you were awarded a portion of his 401 retirement account when you divorced, you will need to have a Qualified Domestic Relations Order prepared and served on the plan administrator, if you haven’t done so already, so the plan administrator will know to pay your portion of the plan to you when he retires, and not to him. You say that he is no longer working for that company, so it may be that he cashed out that plan, in which case you’ll need to take legal action against him to recover the share that should have gone to you. If the retirement plan wasn’t addressed in your divorce agreement, then you likely can take legal action to open up the divorce for the purpose of dividing that asset.

  4. My ex and I divorced after almost 30 years. I was at LSU ad had better jobs than him to that point. We got married and I had two kids one year apart and then another five years later.we move all over the country so he could continue to move up in his job and make more money. I became a stay at home mom. When we divorced he was making a lot of money, two bonuses a year and stocks and 401k. We worked it out with just lawyers and came to an agreement that I would get a set amount of alimony and it would be tax free. In other words he would pay the taxes. We would split the sticks and two 401ks. I could never get remarried but he did very quickly. We also agreed that I could never ask for more and he could never give me less. After two years of paying the taxes on the alimony he got married and things started going bad and we went to court and because I was in Indiana taking care of my elderly father I had to be in court by Skype but before court started my ex, his attorney, my attorney all went into the judges chamber without me present and he told the judge he had just paid the taxes for those years out of the goodness of his heart to help me out. Now our kids knew, he had his accountant print coupons for me to send in and even though it said he couldn’t lower what I received he did lower by over $800 a month but just did it the back door way because he stil sends the same amount each month but now I pay over $10,000 in taxes. My mom had died the same month we died for divorce and I started taking care of my dad so I thought my attorney understood and that the writing in the agreement was spelled out well enough. It also had always been an honest man and gave me his word to everything we agreed upon. Do I have any way of making him pay the taxes on the alimony?

    1. If your divorce settlement papers filed with the court call for him to pay the taxes, then he is in violation of that agreement and you can take him to court to enforce that provision. But if its something you agreed to informally but it was never memorialized in your divorce settlement, then it is likely not enforceable. Check with your attorney to find out how those informal agreements are treated in your state.

  5. Jacquelyn Tullis

    My husband and I were married for 32 years. We divorced for 5 years and remarried approximately 2 years before he passed away. I was told that my name was not on his annuity papers for spousal support. I didn’t know if my name had ever been there nor his on mine. Am I eligible for spousal support from his annuity?

    1. You cannot get spousal support from someone who is deceased. If there is some legal agreement that gave you an interest in the annuity, then you may be able to sue any beneficiary on the annuity to get your legal share. But if the annuity was making payments to him for his life and it ended upon his death, then there would be no asset from which you could collect.

  6. Ginita,
    I am passing for a Divorce, we have more than 20 years of marriage, we have a condo together, and I do not have a big salary (around 2,000 monthly). I would like to keep the condo for me and my kids (32 and 24 singles) under our names.I am living in my condo now, and I will complete 2 years in Jan 2019 to recuperate taxes. I am with the idea to ask for a pay off our condo because he spent already a lot of money with his secret life. The condo is under his name as a sole propiertor. I got an alimony of 1,750 monthly, and for now he is paying the mortgage, the HOA, gas and electricity with my alimony that is almost the amount of my alimony. We have still a debt of 180,000 dollars on it. What can I do to own this condo? Also, I can rent one bedroom to someone else. Do I have to keep the property or sell it? I am afraid to keep it with debt because I do not have a big salary, and the taxes that I have to pay every year, will be hight for my salary. Also I do not have a salary to pay for maintenance. What is convenient for me in this case?What is the best for me, keep it or sell it?

    1. You’ll need to sit down, preferably with someone knowledgeable, and list out the pros and cons of keeping the house, including an honest evaluation of whether you can afford it, especially if unforeseen things happen such as illness or job loss. That will enable you to make a thoughtful, educated experience. Asking others for their opinion won’t provide you with an answer — it needs to come from you.

  7. Theresa Caballero

    I live in California, was married and now divorced, both of us worked. He wanted a portion of my retirement benefit so we settled for 25%. I thought I agreed to 25% of what I had in my account up through the day of the divorce but when I read the decree again recently it says “25% of the entire value at the time of her retirement.” So now I’m kicking myself because I didn’t fully comprehend what I agreed to. For some reason I thought he would get 25% up to the date of the divorce. Is there anyway to challenge this now especially since he has not paid me my portion of the community interest on his retirement plan, which isn’t much but none-the-less it is something.

  8. 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?

    1. 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.

    2. 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.

  9. 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.

    1. 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.

    2. Martha Marquez

      My question is my husband has been receiving retirement benefits since 2007, we separated in August 2010, he served me divorce papers in June 2014. He went after my reyirements and recd 1 slump sum from my THRIFT SAVINGS in Dec 2014. I did not receive his retirement benefits till April 2016 & was only paid for March & April of 2016. I was told per QDRO atty I was suppose to receive back pay from date I was served. My X owes me $12,000 of back pay, he wanted to pay me $8,000.00 my portion was not up for nogotioation. Divorce was finalized June of 1015, here we are April 2017 and he has not paid me my back pay, he says he does not owe me money. I disagree, he took half of most of my retirements, now I still have one left where I intent to deduct what he owes me. What do I need to do to finish this nightmare, I want him out of my life completely, he causes me too much stress. Please advise what I need to do to complete this once and for all!!!!

  10. 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)

  11. 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,

    1. 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.

  12. 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!

    1. 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.

  13. 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

    1. 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.

  14. 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?

Leave a Comment

Your email address will not be published.

Scroll to Top