I am Filing for a Divorce and I would like to Keep the House for Me and My Children. But I Am Not Sure if I can Afford it. What Should I do?
There will likely be three options when it comes to your home. These will include: selling the house, buying out your spouse, or having your spouse buy you out. The best solution for you will depend on both personal and financial considerations. It is very possible that you may simply not be comfortable remaining in your current home, or that you will not be able to or be interested in taking care of the home. On the other hand, making the decision to stay may offer your children a sense of continuity.
On the financial side, you need to determine if you can manage the costs of the home with your income after the divorce. This would include the mortgage, taxes, utilities, maintenance and general upkeep. If you decide to keep the house, you need to know if you will qualify for the mortgage on your own. Also, you will need to take into consideration that the capital gains tax and the cost of selling the home will be due when the home is sold down the road.
If you want your spouse to buy you out, then you should evaluate the tax consequences of selling your interest in the house, not just the proceeds from selling the home.
Often, when a proper financial analysis has not been done before a spouse decides to keep the house, they may come to realize later on that it is not affordable. Also, do not let emotions override the financial reality and hang on to a home for sentimental reasons. That does not make for an intelligent divorce.