What about joint housing in the event of a divorce? It is a question many ex-partners ask themselves. How much does it cost to buy your ex out of the house?
Often one party buys out the other. But that comes with some rules and additional costs. Below are what different experts explained.
A divorce is a difficult and hard decision for couples. Once that decision has been made, there is a lot to arrange. In addition to any arrangements for the children, the future of the communal home is one of the biggest priorities.
In many cases, one partner will buy out the other, but that must, of course, also be financially possible. In the other scenario, a sale to third parties follows, and both parties look for their own place.
Ideally, the various partners will come to an agreement without the intervention of the court. Then go over the steps to be taken together. An important starting point is determining the value of the home. After all, the division is based on the current value and not on the basis of the price that the couple paid for the house at the time.
If the partners contributed an unequal balance at the time, that could also play a role in the distribution. Ideally, they wrote down that imbalance in better times in a debt acknowledgement.
In the event of a divorce, you also have to pay taxes if one of the partners keeps the house. This right of distribution is popularly called misery tax. The standard misery tax is 2.5%, calculated on the total current value of the good and not only on the value of the part to be taken over.
The lower rate of 1% applies between ex-married and ex-statutory cohabitants (who have legally cohabited for at least one year). In addition, you also pay other costs, such as the so-called desolidarization, with which the ex-partner distances itself from all responsibilities that are still linked to the outstanding loan.
Who pays the costs?
The question remains, of course, as to who will pay for those extra costs. In principle, the masses bear these amounts, which means that both partners share the costs. In reality, the ex-partners often deviate from this, and the purchasing party pays the invoice.
The underlying idea is that those who leave the house often look for a new house themselves and also have to pay costs, but different variants are possible. It is about an agreement that the divorcing couples make among themselves.
House buyout divorce calculator in practice
Ken and Angel bought a house together several years ago for $255,000. Ken put $45,000 on the table at the time of purchase, Angel $25,000. This unequal contribution was recorded at the notary and is nominally settled. Today the renovated house is worth $300,000.
There is still an outstanding mortgage of $100,000. If Ken wants to buy out Angel after the end of their marriage, the buyout price is:
- $300,000 (the current value) – $100,000 (the mortgage) = $200,000
- $200,000 divided by 2 persons = $100,000
Ken is still owed $20,000 by Angel and therefore owes her $80,000 (100,000 – 20,000 dollars). Both partners have agreed that Ken will pay the misery tax and other notary fees, accounting for a total of an additional $5,000.
What about the mortgage?
It understands to points out that the stocking is usually not finished. Ken can keep the existing loan and take out an additional loan to pay the buyout sum. This additional loan is, of course, also associated with costs and interest. Divorce is, therefore, always a bit of financial suffering.