What Happens to the Family Home in a Divorce?

Naperville Divorce Attorney

For many Illinois couples, the family home is their most valuable asset. This often speaks not only to its monetary value, but the emotional value that a home holds. This is often the first large purchase that the couple made together, the home where their children took their first steps, and the home where their family memories were made. As such a valuable asset, many individuals fight about what will happen to their home in their divorce.

In Illinois, a divorcing couple's property is divided equitably, which means that it is divided according to each partner's personal and financial needs. A parent who has a greater share of parenting time with the couple's children might use this as an argument that he or she should retain the home, but making such a determination is not easy. To allow one partner to remain in the family home, the court must compensate the other partner somehow.

There are many options for handling a family home in a divorce. Each of these has unique benefits.

Selling the Home

Selling the family home and splitting the profit is probably the most straightforward way to handle the family home in a divorce. Generally, the couple splits the fees associated with selling the home, such as broker's fees and the capital gains tax. However, the court may require one spouse to shoulder a greater portion of these costs if there is a significant income disparity between the spouses.

The profit from selling the home might not necessarily be split between the couple 50/50. Sometimes, the couple makes little to no profit from the home's sale. Before a couple's house may be sold, it must be appraised by a certified Illinois real estate appraiser to determine its market value.

One Spouse Buying Out the Other

When one spouse wants to remain in the family home after their divorce, he or she may opt to buy out the other spouse's share of the home's value. This can be done through two different methods:

• The buying spouse refinances the home and takes out a new mortgage loan. He or she then repays the selling spouse for his or her share of the home, either gradually or in one payment; or
• The buying spouse retains the home in exchange for a smaller portion of the couple's other assets, such as retirement accounts and other pieces of property.

The advantage to this setup is that neither spouse has to go through the hassle of selling the home, which can take a year or longer and require substantial time, money, and energy. It can also be preferable if the housing market is weak. Keeping the home can also be beneficial for the couple's children, because it cuts down on the amount of upheaval they have to face with the divorce.

One of the distinct disadvantages of a buyout is that the selling spouse loses his or her investment in the home, potentially missing out on a significant amount of money once the home's value appreciates.

Co-owning the Home

For some couples, continuing to co-own a home after their divorce is a productive choice. Sometimes, this is a short-term solution for couples who want to eventually transfer ownership of the home to one partner but cannot at the moment due to a lack of funds. It can also be part of a deferred sale agreement, where the couple decides that they will sell the home at a specified future date, such as the youngest child graduating from high school.

The advantage to this setup is that both partners continue to build equity in the home. There are also many disadvantages, such as the burden of dividing the home's upkeep costs and the couple having to remain in fairly regular communication with each other. Both partners are also responsible for the mortgage, which shows up on their credit reports. If you are considering co-owning your home after your divorce, discuss the tax requirements and other financial issues, in depth, with your accountant and your attorney. It is also in your best interest to write a will detailing what will happen to your share of the home in the event of your death.

Work With a Naperville Divorce Attorney

Divorces are complex. When a couple owns a home, the home is one of the most important assets to consider when dividing the couple's property. To learn more about your rights and options regarding your home in your divorce, speak with an experienced Illinois divorce attorney. Contact Pesce Law Group, P.C. today to schedule your initial legal consultation with a member of our firm.