Divorcing Texas couples are subject to a ton of uncertainty, especially when children are involved. As a community property state, almost everything acquired during the marriage is divided equally between spouses. So when it comes to the family home, you may be wondering what your options are.
Sell the family home
One option during a divorce is to sell the family home, and split the equity. This option can provide each spouse with extra cash to start over and pay for lawyer fees or additional expenses associated with the divorce.
However, capital gains may have to be paid if the home was owned for less than two years. Additionally, it is possible to lose money on your home if it has been refinanced.
Buy out the other party
If one spouse wants to keep the home after the divorce proceedings, the other spouse can buy him or her out. In general, the current value of the home divided by half will determine how much the spouse must pay to keep the house. However, other factors, like income and earning potential, can come into play.
This option is good when, if you sold the house, you would face a loss due to a bad seller’s market. The house usually must be refinanced into the single spouse’s name if it is currently in both names.
Continue to co-own the family home
This option is good for allowing children to remain living in their home or when one spouse cannot afford to buy the other out. Agreements must be made concerning how much each spouse continues to pay for the home, the division of equity upon selling and when payments will be made.
Additionally, both spouses are ultimately responsible for the home, and late payments by one or the other can affect both individuals’ credit reports. The spouse who is not living in the home may also face paying capital gains on the home when it is sold.