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If your spouse is paying the mortgage with support from you, it might be fairer to simply agree to divide the net proceeds with no credit for mortgage payments. |
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Decide now how you're going to handle the sale of the house when the time comes. How will you choose the list price and sale price? You might each choose your own real estate agent and then settle on the average of the prices they recommend, or you might have your respective agents choose a third agent, unknown to either of you, who will set the listing and sale price. |
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And now is the time to consider such strategies as dropping the price by a certain percentage if the house is not sold within a certain number of months from when it is first listed. You can set the percentage now, or leave the final figure to the discretion of the agent who handles the sale. |
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Even if the sale of the house seems far in the future, you might also take the time, now, to devise a first option, which means that the spouse who stays in the house has the first right to match a bona fide offer on the house and buy out the other spouse. If that spouse passes on the right to buy, the spouse who didn't stay in the house then has the same right to buy out the other. (You can also reverse who gets the first option.) |
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Finally, anyone who's bought or sold real estate understands that the taxes saved or incurred with such a sale can be enormous. Therefore, it goes without saying that if you plan to keep the house in the family after the split, you should consult a tax attorney or accountant about the ramifications of leaving your name on the house deed even though you yourself will be gone. The last thing you want to discover, 20 years down the road, is that you're liable for taxes you never dreamed of. |
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Now is the time to decide how the tax on the profits, if any, will be shared. Fifty-fifty? In the same proportion as the proceeds of the sale? Remember, one of you may be getting a larger share of the net proceeds because that individual made the mortgage payments. That person might then have to bear a larger share of the taxes as well. |
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And remember, when negotiating over the house, to give credit where credit is due. If the person who keeps the car has not paid the other spouse for half the value of the car at the time of the split, it's reasonable to post that sum as a credit against the car keeper's share of the house. |
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Do put everything in writing. Ask a lawyer how your signatures should appear to make the agreement legally binding. (Do you need witnesses? Should your signatures be notarized? Find out now or be sorry later.) |
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