As a Certified Divorce Coach, and years spent working as a California licensed Real Estate Broker, I sometimes advise my clients that are selling property to tread carefully. There are a multitude of things to consider. Firstly, if the marital settlement agreement is not complete and signed, there are some areas to be addressed ahead of time. Sure, both spouses might be agreeable to sell the property and be willing to sign a listing agreement together but what happens if the property being sold is upside down in value? This would necessitate a short pay-off to the lender. This can potentially carry tax ramifications in the form of cancellation of debt income. Additionally, the sell of the property could generate paper gains which could trigger capital gains issues. Without understanding the nature of the taxes and legal issues, your property settlement or marital settlement agreement could potentially not address these underlying issues and be a source for negotiations in the future. It’s best to have a tax professional do a tax projection so you can know ahead of time what the potential taxes are going to look like in your particular situation. Then, you can incorportate this into your divorce agreement. This is why I always strongly suggest working with a Certified Financial Planner (CFP) or Certified Divorce Financial Analyst (CDFA). They will be able to properly address the sale of property and resource answers for the tax ramifications. Keep your other professionals abreast of what you are doing. Your divorce attorney may be able to assit you regarding legal issues in the event one spouse changes his or her mind to sell the house and other issues.
Before you place the “For Sale” sign in the front yard, remember, your marital settlement agreement is only as good as the soil you have cultivated – properly planning is key utilizing the right Divorce Support System – which is engaging the right professionals.
Not all real estate brokers are prepared to understand the issues surrounding selling property during a divorce. Do your homework first and eleminate the unwanted surprises later!