Selling your property before divorce might be a smart move
Have you considered selling your property before divorce is finalised? It may turn out to be a smart move.
Getting a divorce is both an emotionally challenging and complex process. It can involve many difficult decisions, particularly when it comes to dividing up assets. In most marriages, the family home is the most significant asset.
Selling the family home may not be appropriate in a lot of situations, but it could be advantageous for some, and the following potential benefits should be considered:
Simplifying the financial settlement
Dividing assets in a divorce can be a contentious and lengthy process. When the family home is sold before the divorce settlement is agreed, the proceeds from the sale can be split more easily between the couple. Having funds on account following the sale may help eliminate the need for ongoing negotiations over:
- the value of the home
- who gets to keep it
- how one party can buy out the other’s share.
Helping avoid future financial complications
Retaining a property post-divorce can lead to future financial challenges. The person remaining in the property may struggle to cover the mortgage. Or, what happens if the housing market declines and the value of the house falls? Or the mortgage rates increase significantly. If the property is sold before the divorce, then both parties walk away with their share of the equity, thus providing a clean financial slate.
Reducing emotional stress
Undoubtedly your family home will carry emotional memories. Holding on to the property may prolong the emotional distress of the divorce. Selling the property before the divorce may help both parties to move on, emotionally and psychologically. It allows for a fresh start, without the constant reminder of the previous life together.
Maximising tax benefits
Capital Gains Tax (CGT) can be a concern when transferring assets after a divorce. However, the family home is usually exempt from CGT if it is your primary residence. As such, it may be better to sell the family home while still legally married. This can help you avoid CGT complications later on.
Preventing delays
The longer it takes to resolve property issues, the longer the divorce process can drag on. Selling the property before finalising the divorce can result in a speedier resolution. Once the financial settlement is concluded, both parties can walk away with no ongoing financial entanglements and are able to move on with their lives.
Get expert advice
Selling your property before the divorce can be a strategic move. It can simplify the process, reduce future financial risks, and help both parties transition to the next phase of their lives.
To find out what is the best option for your circumstances, get legal advice from a law firm that specialises in both Family Law and Residential Property.
Bird & Lovibond’s specialist Property & Family teams team can help you navigate the process and choose the path that best suits your personal circumstances and financial interests.