Selling a Home During a Divorce

When two people own a house, selling it takes both of them. If both names are on the title, both signatures go on the deed, and the closing attorney confirms exactly who has to sign before anything is scheduled. That makes the first job simple to say and hard to do: both of you agreeing on a price, a list date, and what happens to the money. I do not take sides in that conversation. My job is the sale, and I treat both owners the same.

The court calendar and the sale calendar run separately, and your attorneys decide how they fit together. A few facts help you ask better questions. In North Carolina, an absolute divorce is available after the spouses have lived separate and apart for one year, with at least six months of North Carolina residence by one of them, and the right to ask for equitable distribution of property is lost unless it is asserted before the divorce judgment.

South Carolina's no-fault ground also requires one year of living separate and apart without cohabitation, and South Carolina family courts divide marital property by equitable apportionment when a party asks for it in the pleadings. A sale can happen before, during, or after a divorce case. What matters is that every owner signs and that any court order or settlement agreement is followed.

Three money questions come up in almost every divorce sale: who pays the mortgage and carrying costs until closing, how the proceeds are split, and what the IRS says. Put the first two in writing through your attorneys before the house is listed, because they are much harder to settle once an offer is on the table.

On the third, the IRS lets you exclude up to $250,000 of gain on a main home, or up to $500,000 on a joint return, when the ownership and use tests are met. If a spouse or former spouse is allowed to live in the home under a divorce or separation instrument, the IRS counts their use of the home toward the test, and a divorce or legal separation is one of the situations that can qualify for a reduced exclusion when the two-year test is not met. Your tax professional puts those pieces together for your case.

Often one of you is still living in the house while it is on the market. We agree on showing windows in advance, personal papers get put away, and the staging stays neutral so a buyer sees a home rather than a situation. The goal is a sale that happens on schedule and with the least friction possible for both owners. Read how I prepare a home for market and what your house is worth before you decide on timing.