On behalf of Stange Law Firm, PC posted in Property Division on Thursday, January 18, 2018.
One of the most important decisions an Illinois couple that is going through a divorce is whether or not to keep the marital home. While it may be tempting for them to keep it, there may be many reasons not to. In many cases, this asset is tied to guilt, disappointment and anxiety. People may feel guilty about selling the home a child grew up in or upset about having to move regardless of the reason why.
In some cases, keeping the home may not be the smart financial option. An individual who has just gotten a divorce may be solely responsible for paying a mortgage, property taxes and the cost of maintaining the house. This could result in a situation where a person is considered to be house poor. In other words, a person has a home but not enough money to maintain a decent standard of living.
Those who decide to sell while still married or just after a divorce may get favorable tax treatment. Married couples who sell their homes can avoid paying capital gains taxes on the first $500,000 of profit. A single person only enjoys an exemption on the first $250,000 of profit. Depending on the value of the marital home, this exemption could save an individual tens of thousands of dollars in taxes owed.
Although a home may have sentimental value to an individual, it may not outweigh the financial benefits of selling it. As part of the property division process, proceeds from the sale may be divided in an equitable manner. In some cases, a lower earning spouse or a spouse who has primary custody of a child may receive a larger share of those proceeds. An attorney may help an individual obtain a favorable settlement.