It's common that one spouse wants to keep the marital home after the divorce, especially when that home has a low mortgage and a low mortgage rate. This article is part 3 of 3 discussing the many things to think about other than just the mortgage and addresses issues that arise if there is a buy-out or sale.


  1. Taxation and capital gains.


    1. A party must live in the house 2 out of 5 the last years to get the primary residence $250K capital gains exclusion upon sale. See IRA Publication 523.

    2. When sold and split pursuant to divorce, non-taxable transfer only if within 6 years of divorce.

    3. Whoever wants to take mortgage interest deduction or property tax deduction must make payments directly to bank/county for audit trail to prove deduction. If the "mortgage payment" is paid to the spouse for payment rather than directly to the mortgage company, it may be considered spousal support. It also will not be deductible per IRS.

    4. Will each party have receipts and equally share in tax benefits related to improvements that added to the cost basis through the entirety of home ownership during and after marriage?

  2. Future Sale of Home. Will co-ownership be Indefinite or is there a deadline by which a buy-out or sale will occur?


    1. Listing for Sale Considerations: costs, offer acceptance, listing price.

    2. What timeframe markers will the parties consider a buyout or sale of the home?


      1. Ex: Anytime, 3-year mark, 6-year mark max for tax purposes.

      2. When one of the parties needs liquidity?

      3. Which spouse (or both) can decide to sell?

      4. Will there be a right of first refusal?

      5. If a buyout is applicable, how will the price be determined?


    3. Will there be a third-party neutral appraiser or will several be used and averaged?

    4. How will a realtor will be selected?


      1. Will one party propose 3 realtors for the other party to choose?

      2. Will one party be responsible for selection?


    5. If the realtor makes recommendations for upgrades and repairs, will both parties need to agree? If one party does not agree may the other party pay for the repair alone or will the house be sold “As is”?

    6. Will the costs of sale (including title, fees, staging, storing of furniture, etc) be shared equally by both parties?

    7. When will the house be listed for sale?


      1. Only in the spring market?

      2. Anytime agreed upon?


    8. Who will decide on the list price for the home?


      1. Deferral to realtor?

      2. What if it does not sell in a specified period of time? What is the time frame and will you agree to reduce the price according to the realtor’s recommendation?


    9. When an offer comes in, will both parties agree to accept it if it is within X% of list price or will you defer to realtor for whether to accept or not?

    10. How will you decide whom to sell it to if multiple offers? Cash only, no contingencies (if market conditions allow), highest offer, other?

    11. If an inspection requires repair, will you proceed with the repair or instead try to reduce the sales price to accommodate? Will it depend on the dollar amount or a specified threshold of cost?

    12. Who will pay and manage move-out responsibilities?