As the old adage goes, "Home is where the heart is." But, when hearts break and divorce is on the horizon, couples have to make some important decisions on how to handle the home in the property division process. It is important that couples in Colorado facing this situation understand what their options are, so they can make informed choices that are in their best interests.
One option is that neither party receives the family home. Instead, the family home can be sold, and the couple can split the proceeds. This option may be attractive to those who have bad memories regarding the home and want a clean break. However, depending on whether a profit was made on the sale, there may be tax consequences for selling the family home. In addition, each party needs to have good credit and enough income to either rent or take out a mortgage on their own.
Sometimes, a couple will continue to own the home jointly, even after their divorce. This might be an attractive choice if they have children who want to stay in the home they're familiar with and attached to. However, this option takes an incredible amount of cooperation -- both financially and in maintaining the home -- that many divorcing couples simply do not have.
Finally, oftentimes one party keeps the home and buys out their ex's share. The home will need to be appraised so that a fair buy-out amount can be reached. Future tax consequences should also be kept in mind during this process. The spouse keeping the home should then refinance the mortgage in their name only. This way, the spouse who doesn't keep the home will not be liable if their ex defaults on the mortgage. The party keeping the home will want to consider all the financial aspects of home ownership -- a mortgage, upkeep, taxes and insurance -- before deciding whether this is a good option for them.
The family home is often one of the largest assets a couple owns together while married, so it is important that fair and appropriate decisions are made when it comes to dividing it. Because these options could impact a person for a long time, it is important that no decisions are rushed into. Spouses should make sure they have a full understanding of the property division process, so they can make informed choices.