Selling Your House During Divorce in Dallas – Your Options, What You Need to Know and FAQ
Protecting your finances is one of the top priorities in a divorce. For many Texans, the most significant part of that goal is making sure that your interests are protected when it comes to selling your house. Selling your house during divorce in Dallas can be extremely difficult. Emotions can be high in a divorce.
An experienced Dallas real estate agent who specializes in working with couples going through divorce can help you navigate the complex process of selling your house during the divorce.
Here are a few options available to couples during divorce regarding the sale of their house.
#1. Sell The Home
One of the common ways to split assets in a divorce in Dallas, especially a house, is to put it on the market, sell it and split any equity equally among the two of you. This is common especially if there aren’t children involved. It simplifies things by eliminating a pending mortgage and if you can sell your Dallas home quickly, expedites the divorce process in Dallas. This may not be a good option in a buyer's market where there is a huge inventory of homes available to buyers for purchase.
The decision to keep the house or sell it is part emotional and part financial. Sometimes our wants aren’t financially feasible—especially when it comes to the outcome of the house—which is why cooperation goes a long way in this situation.
The Advantages of Selling Your Home When Going Through a Divorce in Dallas
There are obvious benefits of selling your home during the actual divorce process in Dallas.
The proceeds from the house sale will allow both the parties to move on quicker and maybe even invest in a new home.
It will be easier for you to handle other joint financial matters. Most couples will find that they have some joint debts such as loans, outstanding credit card balances, and perhaps even pension arrangements that need to be agreed on.
It saves you from the financial commitment of maintaining the house. Could you keep up with ongoing maintenance payments such as repairs and servicing of HVAC systems on your own after divorce?
You may also want to sell the house in Dallas if It’s too emotionally painful to live there after the divorce.
Dividing the Proceeds From a Home Sale in Dallas
Texas is a community property state which means that everything purchased by a couple during their marriage is considered to be jointly owned. This impacts how you sell your home in Dallas during a divorce.
There are exceptions and if you have signed a prenuptial agreement, you may find different laws apply. However, most of the time, the home is considered a joint asset and you need to be prepared for that.
This is also likely to apply to all debts, and you need to make sure that you have a clear picture of what you jointly owe as well as own. If you are in doubt, or can’t agree, ask for mediation. It will help you to solve any problems quickly.
At the end of the day, you don’t want to lose a buyer for your home listed for sale in Dallas during your divorce and this is why it is so important to keep on talking to each other. Keeping the communication lines open will save you money and you will also make more money from your divorce home sale in Dallas.
To sell your home when going through a divorce, talk to a REALTOR who specializes in working with couples going through a divorce. Get an honest assessment for your Dallas home. Find out what the market value of your home is and the estimated cost to sell the home. A top Dallas REALTOR who specializes in working with couples going through a divorce can help you understand the process and guide you through the home sales process to minimize the associated stress.
Preparing the House for Sale During Divorce in Dallas
Selling a home requires some groundwork to be completed before the home can be listed. This involves preparing the home for showing and can include cleaning, repairing, completing required listing documents and staging the home. Do your best you can and make it presentable for sale. Remember you both have a stake in the successful sale.
Buying Your Next House After Divorce in Dallas
If you are selling the marital house in Dallas during divorce and will be buying a new house in Dallas, make sure that you work with an experienced REALTOR who can help you with the potential issues that can cause delays in selling of your home and coordinate the purchase of your new home.
Be honest with lenders and start the process early. While you need to be prepared, don’t lock any rates in before you are really ready to pull the trigger. Constantly running credit for new approvals can hurt credit scores.
#2. One Spouse Keeps The Home After Divorce in Dallas
Instead of selling your home when going through a divorce in Dallas, one of the spouses may decide to keep the home by buying it from the other party. While this option is more common when children are involved (to provide them stability in their life regarding schools and friends), it is a viable option in any divorce if both the parties agree. In this scenario, you decide to buy the house from your soon-to-be-ex. He or she will agree to quit their interest in the property by completing a quit claim deed. For their part, you agree to assume the mortgage and buy them out of their equity.
To buy your spouse out of the mortgage, you need to contact the lender and explain the divorce scenario and request an assumption of the loan. Lenders will more than likely have you go through the loan approval process (underwriting) as an individual to make sure you can afford the house on your own. Make sure you document all the income you have, including spousal support.
If the lender won’t let you assume the loan, you need to apply for a refinance. If interest rates are lower, this might be a really good option. Again, this will be like getting approved for a home purchase from scratch. You have to meet all the income and debt requirements of the lender to qualify.
If you need some assistance for selling your house during divorce in Dallas, give us a call at 469-269-6541 or FILL OUT OUR ONLINE FORM.
#3. Co-own The Home After Divorce in Dallas
Instead of selling your home in Dallas during a divorce, another option to consider If you have children and you want to keep them in the same house is that both the parties stay on the mortgage to create as little disruption as possible. The remaining spouse can make full payments, or you can both agree to a percentage.
This is the riskiest option for couples after the divorce in Dallas. This requires a considerable amount of trust after divorce. The success of post-divorce co-ownership depends on several factors, including:
There is a mutual understanding that the full amount of the mortgage on the house will appear on both spouses’ credit reports. If the spouse covering the mortgage falls behind in making payments or allows the home to go into foreclosure, both credit reports will be affected equally.
Both spouses understand that they are essentially entering into a new business relationship rather than extended the former family relationship. All agreements between the two parties, such as the agreement of one spouse to make payments to the other toward the eventual sole ownership of the home, should be commemorated in writing.
Each spouse is prepared to accept that his or her financial future will continue to be affected by the decisions of the other, particularly those directly involving the property, for as long as they co-own the home
If you need some assistance for selling your house during divorce in Dallas, give us a call at (469) 269-6541 or FILL OUT OUR ONLINE FORM.
Selling a Home in Dallas During Divorce - FAQ
What are the tax implications of selling the marital home?
The biggest tax-related issue to watch out for when selling is capital gains taxes. Capital gains taxes are federal taxes paid on the profits you make when you sell your house (assuming your house value has appreciated). Luckily, if you’re selling your primary residence, you can usually write off most, if not all, of the profits with the home sale exclusion. If you’ve lived in the home for at least two of the past five years, you’ll be off the hook for paying taxes on up to $250,000 (if single or filing separately) or $500,000 (if filing jointly) of the proceeds you make from selling the home. Of course, it’s best to speak to your tax professional before making any capital gains-related decisions.
Selling the home as a couple: If you’ve both lived in the residence for two of the past five years, you qualify for the full exclusion of $250,000 per individual or $500,000 per couple.
Selling the home during the divorce: Depending on your tax situation, it can be beneficial to wait on finalizing your divorce until you’ve closed the sale and filed your taxes jointly. This allows you to make sure you can get the full tax exemption.
Selling the home after the divorce: If you decide to wait to sell your home until after your divorce is finalized, each partner can still claim the full $250,000 exclusion, assuming you meet the two-year residency requirements. But pay attention to the time limits — you’ll want to sell before three years have passed to avoid paying capital gains taxes.
Is There a Way to Prevent Foreclosure when Divorcing in Dallas?
A short sale is one way to avoid foreclosure that involves the property being purchased for less than what is owed, and sometimes the rest of the debt is forgiven. To conduct a short sale, you most likely need a real estate investor, as regular buyers aren’t willing and don’t know how to deal with this kind of complication of buying a home.
If the divorce decree led to your ex-spouse getting the family home and your ex let the house go into foreclosure, you could force a short sell against your ex’s wishes with a partition lawsuit and avoid your credit score being at risk.
When you’re blocked from short selling, bankruptcy could work in your favor. By filing for a Chapter 13 reorganization and repayment plan you can temporarily stop the clock on foreclosure and have additional time to sell your property or negotiate with your lender.
What Are the Tax Exemption Rates for the Sale of a House After Divorce vs Before Finalizing It?
Make sure you have an accurate grasp on what your profit will be by knowing what to expect in terms of capital gains tax.
The bottom line for the tax deduction is the same for a couple selling before divorce and two individuals after divorce. If you sell before divorce is finalized, you and your soon-to-be ex receive a tax deduction of $500,000. Meanwhile, each individual in a divorced couple can save $250,000 per person.
However, some cases do not follow these guidelines. Properties given as gifts or held in trusts are subject to different rules, as are spouses who aren’t American citizens.
Should I Ask for a Permission from My Ex-Spouse When Selling the House in Dallas?
Because Texas is a community property state, both individuals must agree to sell a house in Dallas if the property is jointly owned. If you bought the house during the course of your marriage, the residence could still be community property even though only your name is on the deed. The rule still applies if only one individual paid for the mortgage, taxes, and other property expenses. To list the house on the market if the ownership hasn’t been completely transferred, you need a quitclaim deed from your ex.
But if you inherited or received a house during your marriage as a gift, you can sell without your ex partner’s consent because in this case it is a separate property.
Can I Force the Sale of Our Marital House? What is the Partition Lawsuit in Texas?
An action for partition in Texas involves a court forcing a property to be physically divided (partition in kind) or if the property cannot be divided equitably, then forcing the sale of a property (partition by sale). You can file a partition lawsuit at any time and for whatever reason you see fit. But with that said, this route to selling without your ex-spouse’s consent can be expensive and is not a sure-fire way to secure a court ordered sale.
Your Ex Doesn’t Pay the Mortgage on Time when Your Name Is Still on It
You can stop a joint mortgage from leading to you suffering through foreclosure after divorce. When a person not living in the house has their name on the mortgage, a court ordered sale can prevent you from being affected by your ex missing payments.
Your Ex Who Was Deeded the Home Refuses to Remove Your Name from the Mortgage
Get in touch with a lawyer to start the process of getting your name off the mortgage if your ex won’t refinance or assume the loan themselves despite the fact that it’s specified in the divorce decree. If your ex has the house and only your name is on the mortgage, a court ordered sale can save you from missed mortgage payments dragging your credit down.
What If My House Won’t Sell During A Divorce
More Dallas Divorce and Home Selling Resources:
What are the options of selling a home during divorce via SF Gate.
What to do when selling a house and getting divorced by About.com
How should proceeds be divided when selling a home and going through a divorce by DivorceNet.com
What are the tax implications of divorce by Turbo Tax.
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