Four questions to ask about the marital home in property division

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For millions of divorcing couples in the country, including thousands in Virginia, the end of their marriages often entails dividing assets and properties. A marital home is both a huge financial asset and a cultural symbol of married life, so its disposal has a psychological effect on the couple and their children. So when it comes to divorce, most couples finally have to ask themselves: What happens to our home? Will one of us keep it? When it comes to a final answer, a few more specific questions about property division need to be asked.

First, will either spouse be able to refinance the mortgage? Refinancing can be especially challenging. Qualifying for federal loan guarantees means a look at an applicant's debt-to-income ratio. If the custodial parent plans to live in the house, he or she cannot count on child support and alimony as income for at least a year.

Second, can either spouse really afford to keep the marital home? Upkeep on a house is expensive and includes maintenance, furnishings and property taxes. These costs never go down. Unless an individual can depend on an increase in income, keeping the marital home without going deeply in debt may become nearly impossible.

Third, what is the housing market like? The home will only be an asset if the home market will be stable in the months to come. Even the most optimistic estimate is only a guess, and given the expenses involved, a bad guess could be incredibly costly.

Fourth, what are the tax implications if a spouse keeps the house in order to sell it later? Selling a house at a profit means paying capital gains taxes, which rarely go down.

Answering these questions can help spouses figure out whether keeping the house will be a good or a bad gamble.

Source: Forbes, "Four Questions To Consider Before Deciding To Keep Your Marital Home," Jeff Landers, Feb. 17, 2015

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