Married couples in Louisiana going through a divorce who own a home need to carefully plan how to deal with the issue of what happens to that residence. For many, this may be the key issue after dealing with custody and support of the children, as it may well be the largest economic asset the couple has.
When both spouses agree on the need to sell the home, and there is the ability to get more from the sale than what is owed on the existing mortgage, it may not be that complicated to simply split any resulting profits. Even then, however, various tax issues and consequences may have to be taken into account. For a personal residence, there currently is an amount of capital gain that is exempt from taxation, but some couples may still have some exposure to taxes.
The issue becomes more difficult if it is not possible to make a profit on the sale of the home or if one spouse wishes to continue to live there, possibly with the children. Sometimes, if neither spouse wishes to live there, based on the expenses, maintenance costs and property taxes that come with the residence, it may be necessary to sell the home, even if it results in a loss. In some instances, a divorcing couple has opted to retain the home and rent it out to third parties. This can lead to future problems if the ex-spouses, who are now co-landlords, cannot agree on issue that arise in the management of the building.
Another option is refinancing the existing mortgage and getting a new mortgage in the name of one ex-spouse alone. Sometimes that can involve the other spouse receiving some payment, whether from the refinanced mortgage or out of other funds, for their share of the equity in the property. One thing is clear: It is best to carefully sort out this issues and come to a definition resolution as part of the divorce settlement with the assistance of experienced divorce attorneys who can make sure that all changes are properly executed.
Source: Newsday, “Your Finance: Divorce and the marital home” Geoff Williams, Oct. 11, 2013