Selling A House During a Divorce in Kentucky

Selling A House During a Divorce in Kentucky Louisville Lexington Elizabethtown Bowling Green KY

This article is for informational purposes only and is not legal advice.  If you’re looking for legal guidance to understand divorce law in Kentucky we recommend speaking with an experienced divorce attorney in Kentucky.

Selling A House During a Divorce in Kentucky

Going through a divorce can be a challenging and emotional experience, and for many Kentucky residents, it involves navigating the complex process of selling a marital home. Houses are a valuable asset but dividing large assets isn’t easy and adds an extra layer of complexity to an already difficult situation.

Selling real estate in a divorce can be a complex process, and it is always a good idea to consult with an experienced divorce attorney to ensure that your rights and interests are protected.

In this article we’ll cover:

Is Kentucky a community property state or a separate property state?

Kentucky is a separate property state. In separate property states, each person involved in a divorce maintains ownership of any property that they owned prior to the marriage or acquired during the marriage as a gift or inheritance. This property is not subject to division in the event of a divorce. Marital property, which is property acquired during the marriage, is subject to division in a divorce and is divided equitably between each spouse. This is an important distinction when selling a house during a divorce.

What Is Considered Marital Property in Kentucky?

In Kentucky, all property acquired during the course of a marriage is considered marital property, with a few exceptions that we’ll expand on further below. It is subject to division in the event of a divorce and the divorce court will divide large assets equitably between the two spouses in the divorce settlement.

According to Kentucky Law KRS 403.190 (2) “”marital property” means all property acquired by either spouse subsequent to the marriage except:

(a) Property acquired by gift, bequest, devise, or descent during the marriage and the income derived therefrom unless there are significant activities of either spouse which contributed to the increase in value of said property and the income earned therefrom;

(b) Property acquired in exchange for property acquired before the marriage or in exchange for property acquired by gift, bequest, devise, or descent;

(c) Property acquired by a spouse after a decree of legal separation;

(d) Property excluded by valid agreement of the parties; and

(e) The increase in value of property acquired before the marriage to the extent that such increase did not result from the efforts of the parties during marriage.”

Who Gets the House in Divorce in Kentucky?

The divorce court will generally try to divide the house equitably between the two spouses during a divorce. This means that the court will try to divide the value of the marital home as fairly as possible, taking into account the factors listed above in divorce proceedings. In some cases, one spouse may be awarded the house with the other spouse receiving other property, while in others, the house may be sold and the proceeds split between the two spouses during the divorce.

Under Kentucky law in a divorce case dividing equitably doesn’t mean dividing equally. Instead, the court will consider many factors in determining what is a fair and equitable division of the property in the divorce settlement. These factors may include the length of the marriage, each spouse’s contributions to the marriage (financial and non-financial), each spouse’s earning capacity, and each spouse’s debts and liabilities. Specifically, Kentucky Law KRS 403.190 (1) identifies the court considers the following in a divorce case:

“(a) Contribution of each spouse to acquisition of the marital property, including contribution of a spouse as homemaker;

(b) Value of the property set apart to each spouse;

(c) Duration of the marriage; and

(d) Economic circumstances of each spouse when the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to the spouse having custody of any children.”

How Do I Buy my Spouse Out of the House?

The simplest way to buy the spouse out of the house is to pay for their half of the home based on fair market value. Often, this requires a significant cash payment to cover their equity and liabilities of the property. This may be arranged prior to the divorce or part of the negotiated settlement agreement but it does require one spouse to have the financial means to do so.

We often see many want to keep the home for sentimental reasons or the fear of moving to a new location. Often this isn’t practical for financial reasons.

The Best Way to Divide Real Estate During a Divorce

While there may be many creative solutions to divide real estate during a divorce for most situations the best way to split the real estate asset is to sell the house in a divorce.

In our experience the property may need repairs, have outstanding bills, late on property taxes or behind on mortgage payments.  During the emotional experience of a divorce many often struggle with making rational and fair decisions especially when there’s children involved.  It’s usually in both parties interests to have their divorce attorneys cover these outstanding debts from the proceeds of the property sale with the remaining cash split between both people.

The Best Time to Sell House While Divorcing

Selling the house before a divorce

Selling a home before filing for divorce is unrestricted legally and operates similarly to a regular home sale during marriage. The advantage of selling the family home before filing is that both parties can utilize the proceeds for finding new housing, paying off debts, and hiring attorneys.

Selling the house during a divorce

Filing for divorce typically results in a standard family law restraining order that prevents the sale of the family residence without a court order. Selling a house in a divorce can be complicated and slow down proceedings due to increased legal involvement and ongoing asset mediation.

Selling the house after a divorce

Selling a home after a divorce in finalized can be challenging as it requires dividing the equity earned after the divorce proceedings are closed. Both parties are also responsible for paying the mortgage and new housing costs, increasing the risk of delinquency.

Do I Pay Capital Gains Taxes on a Home Sale in a Divorce?

This depends on many factors, though if both spouses are benefitting from the gains of a property both spouses are liable for the associated taxes during a home sale. In most cases if the house was the primary residence for 2 of the last 5 years and the gain was less than $500,000 they likely qualify for a tax break.

According to the IRS topic 701: “If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse.”

We recommend consulting with an experienced tax professional for advice on your individual situation.

Considerations When Selling a House in Divorce

When it comes to selling a house most people only think of selling through a real estate agent.  In many situations selling the traditional way with a real estate agent is a good option but has its own set of drawbacks:

Who Pays for Repairs When Selling with a Real Estate Agent?

If the marital home needs repairs to be ready to list with an agent that takes upfront cash and time.  You may need thousands of dollars and many weeks to catch-up on repairs. 

How Long Will It Take?

According to Zillow the average time to sell a house is between 2-3 months.  That’s after repairs and starting the first-day it’s on the real estate market.  Once the property is under contract there’s also many steps including home inspections, real estate appraisers and often mortgage underwriting that takes even more time.

Who Pays Mortgage Payments, Insurance & Property Taxes?

While selling a house the traditional way the bills still need to be paid or you’ll be at risk of default. One spouse may be living in the house at the time with the other spouse may have new living arrangements, both still have a legal interest in the property during the home sale process.

Prepared for Ongoing Negotiation?

Selling a house through an agent has its own set of negotiations with the buyer.  In a divorce it’s even more complicated because one spouse is negotiating with their own separate interests in mind often without consideration for the other spouse’s interest. The back and forth paperwork often creates a lot of unwanted stress. 

This is a costly, time-consuming and stressful way of selling and it can make the divorce proceedings so much worse.

The Fastest Way to Sell a House in Divorce

Fortunately, there’s another way of selling the primary residence in a divorce and that’s to sell your house to a real estate buying firm which is what we do at We Buy 502. The real estate buying firm will buy your house quickly, for cash, in as-is condition and as a bonus, there are never any commissions or fees to pay. You don’t have to fix up the property and the sale can be completed in days, not months, with very little paperwork. Most will also cover back mortgage payments, property taxes and other liabilities in their offer.

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Wrap-Up, Selling a House During Divorce Fast

It’s important to remember that divorce can evoke strong emotions, but it’s crucial to try to remain rational and level-headed when making decisions about the sale of a house. This can help ensure that the process goes as smoothly as possible and that the outcome is in your best interest.

Hi, I’m Nyx Sherwin owner of We Buy 502. We’re a small, family-owned business located in Louisville, KY and we’ve also called Lexington and Bowling Green home.

We know selling a property can be a long and tiresome process. From repairs, to showings, negotiations and the waiting game to close. We believe there’s a better way to sell real estate that most don’t consider.  

Our process to buy your property is straightforward and simple.

We Buy 502

Nyx Sherwin is the author of this website and a Kentucky based real estate investor since 2007. |

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