How do you sell a house during a divorce?
Most divorcing couples either sell the house and split what's left after the mortgage and costs, or one spouse buys out the other and refinances the loan in their own name. Both owners usually have to sign the sale, so agree in writing on the price, the timing and how the money is split, ideally in your settlement or a court order, before you accept an offer.
By Andy Rong
Published
This guide is general information, not legal, tax or financial advice. Laws change and every situation is different, so check yours with a professional.
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What are the options for the house in a divorce?
Sell it and split the money
The house is sold, the title company pays off the mortgage and the costs of sale, and the rest is divided the way your settlement or the court says. It's often the cleanest break, because neither spouse stays tied to the other's loan.
One spouse buys the other out
The spouse keeping the house pays the other their share of the equity, usually by refinancing the mortgage into their own name. Refinancing matters: if the old loan stays in both names, both stay responsible for it, whatever the divorce decree says about who pays.
Keep it together for a while
Some couples keep the house until a child finishes school or the market changes, and sell later. Put who pays the mortgage, taxes, insurance and repairs in the meantime, and when it will be sold, in the settlement.
Who has to sign when a divorcing couple sells?
Everyone on the deed has to sign. In some states a spouse has to sign even when only the other spouse is on the deed, because the home is the family's homestead. Texas law requires both spouses to join in selling a homestead, even one that's one spouse's separate property (Tex. Fam. Code § 5.001), and Florida's constitution requires a married owner's spouse to join in selling a homestead (Fla. Const. art. X, § 4).
Once a divorce is filed, the court can also limit what either spouse does with shared property while the case is open. Ask your attorney whether any order in your case covers the house before you list it or sign a contract.
How is the money from the sale split?
It depends on your state's law and on your settlement or the court's order. Texas is the only one of the states where Covent buys that's on the IRS's list of community property states (IRS Publication 555); the others divide property under their own rules. Your family law attorney can tell you how a house is likely to be divided where you live.
Give the title company or closing attorney written instructions signed by both of you, or a copy of the court's order, saying how to divide the money at closing. Then each of you can be paid your own share directly.
Do we owe taxes on selling the house in a divorce?
Often not, up to a limit. If you owned the house and lived in it for at least two of the five years before the sale, you can exclude up to $250,000 of gain from your income, or up to $500,000 on a joint return (IRS Topic 701). Once you're divorced you file separately, so each of you is held to the $250,000 limit.
Two divorce rules can help. If you moved out but your spouse or former spouse is allowed to live in the house under your divorce or separation agreement, you can count their time there toward your own use (IRS Publication 523). And moving the house from one spouse to the other as part of the divorce isn't taxed when it happens, though the spouse who keeps it takes on the original cost basis, which matters when that spouse sells later (IRS Publication 504).
Divorce law and the tax rules depend on your state and your situation. This is general information, not legal or tax advice, so talk to your family law attorney and a tax professional before you sign anything.
Selling to Covent Homes
A cash sale can give two people who don't agree on much one price and one closing date to agree on. Covent Homes buys as-is, so neither of you has to fix the house up first.
No repairs or cleaning. You don't repair, paint or clean up for us. We buy the house in the condition it's in.
No showings before you sign. Nobody walks through your house before we have a signed contract, so there are no strangers in your home while you decide.
You pick the day. Choose a closing day 14 to 60 days out, and you get paid at closing.
Closing costs paid. Covent pays the closing costs, including title and escrow fees. You pay off your own mortgage or liens.
Stay 10 days free. After closing, you can stay in the house up to 10 days at no cost, so there's no rush to move.
Cash, no financing. We pay cash, with no lender and no financing contingency, so a buyer's loan can't fall through.
Questions homeowners ask
Can I sell the house if my spouse won't agree?
Not if your spouse is on the deed or the house is your homestead in a state that requires their signature. Your attorney can ask the court to order the sale or decide how the house is handled in the divorce.
Should we sell before or after the divorce is final?
Either can work. Selling first settles the biggest asset early and gives each of you cash for a new place; selling after lets the court's order settle any disagreement first. The tax rules can differ, so ask a tax professional about your timing.
How fast can I sell my house to Covent?
As soon as 14 days. You pick the closing day, 14 to 60 days after you and Covent sign the contract, and you get paid at closing. Need more time to move? You can stay in the house up to 10 days after closing, free.
Do you need to see the house?
Yes, after you sign the contract. You pick a 2-hour window on a weekday between 9 and 5, Covent confirms it, and an inspector walks through. You don't need to clean or fix anything first. Covent may visit again before closing.
Read more about your situation
Sources
The public pages this guide's facts and figures come from.
- Texas Legislature: Texas Family Code, Chapter 5
- Florida Legislature: Florida Constitution, Article X, Section 4
- Internal Revenue Service: Publication 555: Community Property
- Internal Revenue Service: Topic no. 701, Sale of your home
- Internal Revenue Service: Publication 523: Selling Your Home
- Internal Revenue Service: Publication 504: Divorced or Separated Individuals
About the author
Andy Rong leads Covent Homes, which buys houses for cash, as-is, from homeowners in Texas, Georgia, Tennessee, Florida, Indiana, Missouri, Kansas, and North Carolina.
Andy writes these guides to answer the questions homeowners ask before they sell, in plain words, with a public source for every fact and number.
Andy isn't a lawyer, an accountant or a financial adviser. The guides give general information, and each one says when it's time to talk to one.