Should you sell your house before or after divorce?
If you and your spouse are going to split up and you know that means selling the house, when should you do it? Do you want to sell it while you're still married, or would you be better off to give one person the house when dividing assets and then let that person sell it?
The answer may lie in how much your home is worth and how much you'll pay in taxes. If you are going to make under $250,000 in profit, you don't have to worry about it either way. A quarter-million dollars is the cutoff, and no one has to pay taxes at or below that amount.
Again, to clarify, that's $250,000 in profit. Your home could sell for $750,000 and you still wouldn't owe taxes if you bought it for $700,000 and made just a $50,000 profit.
If your home is going to sell for a profit that is over $250,000, though, you probably want to sell the house while you're married. The reasoning here is that the $250,000 is doubled for married couples, bring it up to $500,000.
So, if your home is going to bring in $400,000 in profit, you'll have to pay $150,000 in taxes if you get the house during the property division process and then sell it on your own. If you and your spouse sell it as a married couple and then divorce, you won't pay anything in taxes.
By selling at the right time, you make the home more valuable by ensuring that you and your spouse will keep all of the proceeds.
Before splitting up, make sure you think very carefully about the timing of everything that you do and when it is best to take certain legal or official actions.
Source: Bankrate, "Computing capital gains on home sale," Kay Bell, accessed Jan. 27, 2016