For many married couples, the family home is the single most valuable asset they own. If they decide to divorce, this asset must be divided along with the rest of their community property. But in many ways, a home is unlike other types of property, and so division of this particular asset can be legally, financially and emotionally complex.
Is the home part of the community property?
If you own a home and you are beginning the process of divorce, you must determine whether — and to what extent — your home is part of the community property you share with your spouse.
Even if you owned the home yourself before the marriage, at least part of the home’s value will likely be considered as community property, meaning you share it jointly with your spouse. For example, let’s say you purchased a home for $800,000 million in 2005, got married in 2006 and then divorced in 2024. Today, after years of rising home prices, your home’s value is $1.5 million. Now, a court would find that the increased value of your home during the marriage — about $700,000 — is part of the community property. This means you must divide that $700,000 with your spouse.
Three options
At this point, you have three main options. You can:
- Sell the home: Assuming you receive the full $1.5 million asking price, you will divide the profit with your spouse.
- Keep the home yourself: You will buy your spouse’s share, meaning you must compensate your spouse for their portion of the profit.
- Remain co-owners of the home.
Which option you choose can depend on a lot of factors, not the least of which is the state of the housing market. Home prices may be a lot higher today than when you bought the home, meaning you’re going to have to come up with a lot of cash if you want to buy out your spouse’s share.
Another factor to consider: Interest rates have jumped in recent years, meaning it will be more expensive to refinance your home. This could make the second option less appealing.
Still, the third option is not a good one for anyone who wants to cut ties with their ex.
Homeowners who are going through divorce can benefit from professional guidance from real estate professionals.
