Well, like Sarah, I agree there are scenarios that may favour one party over another. I would say I also hear that there’s an emotional attachment to the marital home. Often times it’s educating about the practicality of keeping the marital home. It’s the largest asset, in many cases, and it’s the largest asset of the marriage. There’s equity that’s tied up in the home. And as Sarah said, this equity may need to be divided and if that’s the case it could involve one party staying, refinancing and getting a new mortgage. If that’s the case we have to evaluate whether they can afford to buy the other party out. If there aren’t other assets would they even qualify for the larger mortgage that might be required to buy out the other party?
We talk through the opportunity when selling a house jointly there’s $500,000 exemption from capital gains. If this is a highly appreciated home, there may be an opportunity lost if one party stays and sells later because their exemption as an individual is only $250,000. So, we have to look at the fact that what one party may receive is only equity and if all of their marital assets are tied up in equity in the home, that may not be advantageous.
Dianne Nolin is a CFP with over 25 years of experience, and Sarah Schuler is an experienced practitioner of many aspects of family law in the Northern Virginia area.